SEC Announces 2018 Examination Priorities
Yesterday the Securities and Exchange Commission's ("SEC") Office of Compliance Inspections and Examinations ("OCIE") released their Exam Priorities for 2018. Understanding OCIE's Exam Priorities is more important than ever, because SEC Examinations of regulated entities increased by 20% from 2015 to 2016. And the SEC's Budget Estimates for 2017-18 have sought to increase Examinations to 13% of all registered investment advisers, up from 10-11% in prior years. The OCIE's 2018 priorities are targeted toward improving compliance, preventing fraud, monitoring risk and informing policy.
For 2018, OCIE's examination priorities are broken down into five categories: (1) compliance and risks in critical market infrastructure; (2) matters of importance to retail investors, including seniors and those saving for retirement; (3) FINRA and MSRB; (4) cybersecurity; and (5) anti-money laundering programs. Under each category, a number of key exam areas include:
1 - Protecting Retail Investors:
* Disclosure of the costs of investing
* Electronic investment advice
* Wrap fee program
* Never-before examined investment advisers
* Senior investors and retirement accounts and products
* Mutual funds and exchange traded funds
* Municipal advisers and underwriters
* Fixed income order execution
* Cryptocurrency, initial coin offerings, secondary market trading, and blockchain
2 - Compliance and Risks in Critical Market Infrastructure:
* Clearing agencies
* National securities exchanges
* Transfer agents
* Regulation systems compliance and integrity entities
3 - Focus on FINRA and MSRB:
4 - Cybersecurity
5 - Anti-Money Laundering Programs
The published priorities for 2018 are not exhaustive and additional priorities may be added in light of market conditions or as OCIE identifies emerging risks and trends.
If you have questions about this Alert, please contact a member of our Mock Audit Group: Daniel Viola at 212.573.8038, firstname.lastname@example.org Yehuda Braunstein at 212.573.8029, email@example.com Sam Lieberman at 212.573.8164, firstname.lastname@example.org.
To read the SEC 2018 Exam Priorities, please click on the link below: https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2018.pdf