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January 12, 2017 at 08:31 AM
The Securities and Exchange Commission on Thursday released its list of exam priorities for the year.
In releasing its 2017 exam list, the agency’s Office of Compliance Inspections and Examinations outlines areas “where we see risk to investors so that registrants can evaluate their own compliance programs in these important areas and make necessary changes and enhancements,” said OCIE Director Marc Wyatt.
Wyatt said in October that OCIE had launched a dedicated inspection team to oversee the Financial Industry Regulatory Authority, FINRA and Securities Industry Oversight (FISIO), which is headed by Kevin Goodman, head of the agency’s broker-dealer exam program.
“We took resources from the broker-dealer program and moved them into” the advisor and investment company exams, Wyatt said then. “As a result of doing that, we’re somewhat more reliant on FINRA. So in relying more on FINRA, we need to make sure we’re enhancing our oversight.”
Outgoing SEC Chairwoman Mary Jo White said the priorities “make clear we are continuing to focus on a wide range of issues impacting our markets, from traditional areas such as marketwide risks to new forms of technology including automated investment advice.”
Also included in the list is the exam division’s focus on the challenges advisors face in operating multi-branch locations, and OCIE is also expanding its Never-Before Examined Adviser initiative to include focused, risk-based exams of newly registered advisors.
The SEC’s 2017 exam priorities address issues across a variety of financial institutions, including advisors, investment companies, broker-dealers, transfer agents, clearing agencies, private fund advisers, national securities exchanges and municipal advisors.
Read on to see some of the top focus areas, including which products, the agency will zero in on this year.
1. Electronic Investment Advice. OCIE will examine registered investment advisors and broker-dealers that offer such services, including robo-advisors that primarily interact with clients online and firms that utilize automation as a component of their services while also offering clients access to financial professionals. Examinations will likely focus on registrants’ compliance programs, marketing, formulation of investment recommendations, data protection, and disclosures relating to conflicts of interest. Firms’ compliance practices for overseeing algorithms that generate recommendations will also be reviwed.
