The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations has released an overview of its examination priorities for 2016. The 2016 examination priorities address issues across a variety of financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, clearing agencies, and national securities exchanges.
New areas of focus include liquidity controls, public pension advisers, product promotion, exchange-traded funds, and variable annuities. A continuing focus will be placed on protecting investors in ongoing risk areas such as cyber-security, microcap fraud, fee selection, and reverse churning.
Regarding retail investors, OCIE will continue several 2015 initiatives to assess risks to retail investors seeking information, advice, products, and services to help them plan for retirement. It also will undertake examinations to review ETFs and related trading practices, variable annuity recommendations and disclosures, and potential conflicts and risks involving advisers to public pension funds.
OCIE will also continue its focus on cyber-security controls at broker-dealers and investment advisers. New initiatives for 2016 include an evaluation of broker-dealers’ and investment advisers’ liquidity risk management practices, and firms’ compliance with the SEC’s Regulation SCI, rules designed to strengthen the technology infrastructure of securities markets and ensure their resiliency.
The advisory notes that OCIE’s enhanced ability to analyze large amounts of data will assist examiners’ ongoing initiatives to assess anti-money laundering compliance, detect microcap fraud, and review for excessive trading.
The published priorities for 2016 are not exhaustive and may be adjusted in light of market conditions, industry developments and ongoing risk assessment activities.