The SEC’s 2026 Examination Priorities report (“Exam Priorities”) from the Division of Examinations (the “Division”) was issued shortly after the federal government reopened. You may have received information on the report’s details and reviewed the SEC’s exam focus areas. We have taken the time to read between the lines and interpret the hidden messages within the Exam Priorities. Here we provide you a different take on what will really happen in 2026.
2026 SEC Exams
The Division is operating under a new SEC Chair now and its priorities have changed from 2025. Under the previous administration the Division was focused on enforcing existing rules and reviewing firms for topics that were on its radar via proposed rules (of which there were many). The 2026 focus has shifted to one of conducting more routine exams with shorter exam periods and risk-focused reviews to narrow the scope and look for “low-hanging fruit” to include in deficiency letters or even better, from the SEC’s perspective, enforcement actions.
For SEC registered investment advisers, there is currently one rule for 2025 that will be a focus for the Division during the 2026 fiscal year, and that is Reg S-P. The compliance date for that revised rule was December 3, 2025, for large investment advisers with $1.5 billion or more in AUM. Smaller advisers have until June 3, 2026, to comply. Beyond a focus on Reg S-P, below we break down the SEC’s expected upcoming exam review areas.
Examinations of advisers in 2026 will focus on the following areas and firm types:
- Financial conflicts of interest
- Best execution of client transactions
- Recommendations for senior investors and retirement accounts
- Dual registrants
- Fiduciary responsibilities pertaining to retail investor protection
- Private fund advisers that manage private credit funds
- Private fund advisers to funds with complex strategies and/or extended lock-up periods
- Recently merged or acquired advisers
- Activist managers and Section 13 filings
- Never before examined advisers and newly registered advisers
And then there are the usual areas that will be part of every full scope exam:
- Cybersecurity
- Marketing
- Valuation
- Trading
- Portfolio Management
- Disclosures and filings
- Custody
- Annual Reviews under Rule 206(4)-7
Upcoming Targeted Exams or Sweeps
The Division is already conducting sweep exams of large firms on Reg S-P compliance. Targeted exam letters went out to several large firms the week of December 3rd to see if firms had changed policies or processes to meet the new requirements. Expect the same treatment for smaller advisers after June 3, 2026.
Artificial Intelligence (AI) is an area of great interest to this SEC. Expect to see sweep exams of firms that would most likely be early adopters of AI, such as retail robo-advisers and algorithmic trading hedge funds.
The AML rule for advisers has been further delayed, but the new Customer Identification Protection rule is still sitting on the SEC’s regulatory agenda as a proposed rule. This indicates that there will most likely be movement on the AML rule to include revisions. Expect another AML sweep if the SEC believes it needs more data to finalize the rule.
One area that was conspicuously missing from the Exam Priorities report was cryptocurrency and digital assets. This SEC has made it noticeably clear that it is a strong proponent of these assets and will seek rulemaking to make trading easier in digital assets. That can only happen if the SEC and CFTC work together on rulemaking initiatives that result from Congressional legislation. A sweep regarding the use and trading of digital assets of diverse types should occur once rulemaking is given the official green light.
The Bottom Line
The SEC overall and the Division especially are now playing catch up due to the time lost from the government shutdown. Just 15 percent of all registered investment advisers are typically examined during the SEC fiscal year – and that year has now been shortened. The Acting Director of the Division recognized the lack of resources in the opening Message from the Leadership Team in the Exam Priorities report.
The pressure is on the SEC’s exam teams to conduct as many examinations as possible to keep the numbers to at least 15 percent or perhaps even more if the SEC shortens exam cycles, relies on sweep exams, uses technology more effectively, and keeps exams very risk based. Quick hit type exams such as those of newly registered advisers will help support the numbers and targeted exams almost always lead to enforcement cases.
Now is not the time to get lackadaisical with your compliance program. Compliance should take the lead to step up internal reviews, ensure its firm’s policies are up to date and begin conducting exam preparation.
View the SEC’s Division of Examinations “2026 Examination Priorities”
