SEC Exam Priorities Said to Focus on Cybersecurity, Seniors in 2018

On the other side, are those who are not as militant, and they understand that companies and firms regulated by the SEC want to avoid cyber incidents and are spending money to mitigate risk and improve their cyber defenses. This side, too, may want to see information sharing and collaboration with the government — and does not want to be as aggressive. As 2018 progresses, the SEC may reveal where it stands among the factions.

Also, the SEC is concerned about savings by retirees and baby boomers. This involves those who saved money in a 401(k) or other retirement fund, and how financial service companies want them to put the money into their firm, which poses some risk.

“Last time, the list had an entire section on senior investors and retirement products. I just don’t see that focus going away, given the drumbeat on that topic as so many of us age and have to rely on retirement assets,” Fanto said. “This topic could include all sorts of things, such as products targeted to seniors.” 

Fanto says other issues could make the priority list for 2018 and may include:

• Problem brokers who move from firm-to-firm or from broker-dealers to advisors.
• Problematic retail products, such as initial coin offerings and anything related to Bitcoin.
• Investment advisor practices.

Edwards suggest other possible categories may be included, such as: high fee mutual funds share classes; failure to disclose fees; robo-advisors; advertising; abusive practices; and anti-money laundering.

Also, given that OCIE Director Peter Driscoll had input into OCIE’s 2017 priorities, many of them could “carry over into the new year. There will continue to be a focus by OCIE on protections for retail investors, especially seniors, from abusive sales and marketing practices and improper fee structures,” Moreno said. “A continued emphasis on reviewing registered investment advisors – particularly those who have never been examined by OCIE – will mean fewer resources focused on broker-dealers.”

The list is not expected to change that much from 2017 priorities, and whatever is listed, the knowledgeable source said the priorities are likely the result of speaking with each SEC commissioner and each division. The list is worked on for months, and becomes a “strategic plan for the year,” the source said.

In fact, the source predicts the OCIE will dedicate three quarters of its time and resources to the listed priorities.

“The OCIE’s priorities list is of significance to compliance officers in broker-dealers and advisers because it tells them what to expect when the SEC’s examiners visit their firm,” Fanto adds.