The Nation Exam Program (NEP) and the Office of Compliance Inspections and Examinations (OCIE) today released its annual SEC Exam Priorities list. The much anticipated annual release shows where the SEC will be focusing its resources throughout the year. Since SEC resources are limited, they must be utilized wisely. Different areas are addressed each year so that the broad spectrum of market risks can be monitored. This year’s list is interesting in several ways:
- It’s a rather short list of exam priorities when compared to previous years.
- Retail retirement accounts are priority number one. So expect SEC exams of both advisers and broker-dealers to focus heavily on retail firms that specialize in retirement assets, especially rollovers of plan assets.
- Large Firm Systemic Risks. The largest money managers and broker-dealers will be even more scrutinized, both electronically and in-person. These firms should expect the number of targeted SEC inquiries (based upon certain transactions or asset types) to increase.
- Big Data. Examiners will target firms based upon the data collected by the various SEC divisions. Of particular interest will be repeat offenders, microcap firms, and suspicious trading activity (AML).
- Municipal Advisors. Newly registered municipal advisors should be prepared for a “new registrant” exam in 2015.
- Never-Before-Examined Investment Companies. This should not be confused with last year’s review of Never-Before-Examined Advisers; these exams will focus on mutual fund complexes that have yet to be examined by the SEC.
- Private Equity Firms. Examiners have found so many deficiencies at these firms that they simply cannot stop looking at them. Fees and expenses are primary targets.
- Cybersecurity. This hot topic area will remain on the agenda for all firms.
View the full list, “Examination Priorities for 2015,” January 13, 2015