The SEC’s Division of Examinations (the “Division”) announced its 2026 exam priorities yesterday. These SEC exam priorities are announced each year to help promote and improve compliance and protect investors. The exam priorities also indicate what specific areas SEC examiners may be focusing on during upcoming examinations this year and cover not only investment advisors but also broker-dealers and transfer agents.
Exam Priorities for Investment Advisors
Advisors’ fiduciary duty, including the adherence to their duty of care and duty of loyalty, continues to be a priority for the Division. The Division mentioned, in particular, that they will focus on investment products with the following strategies or characteristics:
- Alternative investments (e.g., private credit and private funds with investment lock-up for extended periods).
- Complex investments (e.g., option-based ETFs, leveraged and/or inverse ETFs).
- Products with higher costs (e.g., investments with higher commissions and higher investment expenses than similar investments or products).
The Division also said it would be looking at investment recommendations for consistency with product disclosures and clients’ investment objectives and risk tolerance. The following would be given special focus:
- Recommendations to older investors.
- Advisors to private funds that are also advising separate accounts and/or newly registered funds.
- Advisors to newly launched private funds.
- Recommendations of products that are especially sensitive to market volatility.
- Advisors that have not previously advised private funds (e.g. regulatory awareness, disclosures, etc.)
The Division will also focus on certain types of advisors or advisory services or business practices that may have higher risks or conflicts of interest, including the following:
- Advisors that are dually registered as broker-dealers.
- Advisors utilizing third-parties to access client accounts.
- Advisors that have merged or consolidated with existing advisory practices.
As before, the Division also mentioned in its 2026 Exam Priorities that cybersecurity and firms’ procedures and practices to assess whether they are managing information security and operational risks will be an area of focus. Regulation S-ID and Regulation S-P were also mentioned in the Division’s report. The Division also mentioned emerging financial technologies, including automated investment tools, artificial intelligence tools, and trading algorithms and platforms as areas that will be given attention.
Please click on the link below to access the full report issued by the Division.
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.
