Today February 7, 2018, the SEC released its Examination Priorities for 2018. Their focus this year is the retail investor. Prior areas of focus have been subcategorized under the larger retail market. Those include: electronic investment advice, fixed income execution, mutual funds and ETFs, never examined registered investment advisors, wrap accounts and municipal advisors and underwriters. A new category, cryptocurrency offerings are even placed in the retail category.
Market infrastructure is a separate category with transfer agents, clearing firms and national exchanges listed as focal points.
FINRA and the MSRB get their own category. FINRA examinations will focus on operations and regulatory programs and the “quality of examinations” of broker-dealers.
Cybersecurity will continue to be a portion of all examinations. AML will remain a focus. The new customer due diligence rules that go into effect on May 11, 2018, will provide an opportunity for the SEC to review the understanding of customer relationships.
We are a year into a new regime at the SEC and it does not appear that the areas of focus have changed dramatically. Comments from Chair Clayton have not signaled deregulation.
As every year, you should read the SEC National Examination Priorities for 2018 and make sure that your compliance program is ready for examination. If you haven’t had an independent review of your program recently now is a good time to consider it.
© 2018 Sharon M. Davison