The SEC’s Office of Compliance Inspections and Examinations (OCIE) announced today its 2020 National Exam Program Examination Priorities. These SEC exam priorities serve as an indication to registrants of what risks the SEC sees with respect to investors and what areas SEC examiners will be focusing on during upcoming examinations this year. The exam priorities cover not only investment advisors but also broker-dealers and transfer agents.
As has been the case in the past few years, examinations of RIAs will focus on recommendations and advice given to retail investors, with a particular focus on seniors. In addition, SEC examiners will assess, among other things, whether RIAs provide advice in the best interests of their clients and eliminate, or at least expose through full and fair disclosure, all conflicts of interest which might incline an RIA, consciously or unconsciously, to render advice which is not disinterested. OCIE will also continue to focus on risks associated with fees and expenses, and undisclosed, or inadequately disclosed, compensation arrangements. Another area of concern specifically mentioned by OCIE is when an RIA does not aggregate certain accounts for purposes of calculating fee discounts in accordance with its disclosures.
As in previous years, the SEC also mentioned information security and the protection of clients’ personal financial information as an examination priority, including the following specific focus areas: (1) governance and risk management; (2) access controls; (3) data loss prevention; (4) vendor management; (5) training; and (6) incident response and resiliency.
Please click on the link below to access the full report issued by OCIE.
https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2020.pdf
Hayley Nelson is the President and Principal Consultant of NCA Compliance, Inc., a compliance consulting firm providing a wide range of customized compliance solutions for investment advisors. Ms. Nelson previously worked for the Securities and Exchange Commission and a large investment manager in New York.
