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Industry Spotlight > Broker Dealers

SEC Takes Aim at Rollovers, Never-Before Examined IAs

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The Securities and Exchange Commission announced its examination priorities for 2014 in mid-January, and like FINRA, the SEC will also focus on advisor and broker-dealer IRA rollover activity this year.

The SEC’s list also includes examinations of advisors who have never been previously examined, including new private fund advisors, wrap fee programs, quantitative trading models, and payments by advisors and funds to entities that distribute mutual funds.

Dually registered advisors are also on the securities regulator’s radar this year. The agency said that convergence among broker-dealer and investment advisor activity continues to be a “significant risk.”

For example, reps of dual registrants, that are both broker-dealers and advisors, and affiliated advisors and broker-dealers may influence whether a customer establishes a brokerage or investment advisory account, the agency said. “This influence may create a risk that customers are placed in an inappropriate account type that increases revenue to the firm and may not provide a corresponding benefit to the customer.”

As for broker-dealers, the securities regulator says that it will zero in on sales practices and fraud, issues related to the fixed-income market and trading issues, including compliance with the new market access rule.

Andrew Bowden, director of the SEC’s Office of Compliance Inspections and Examinations, said in releasing the list that it highlights areas “that we perceive to have heightened risk.”

The market-wide priorities, the agency said, “include fraud detection and prevention, corporate governance and enterprise risk management, technology controls, issues posed by the convergence of broker-dealer and investment advisor businesses and by new rules and regulations and retirement investments and rollovers.”


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