1. Compliance and Risks in Critical Market Infrastructure
The OCIE will continue to examine entities that provide services critical to the proper functioning of capital markets and will examine clearing agencies, national securities exchanges and transfer agents, focusing on certain aspects of their operations and compliance with recently effective rules.
2. Retail Investors, Especially Seniors and Pre-Retirees
To protect Main Street investors, OCIE plans to examine the disclosure and calculation of fees, expenses, and other charges investors pay; the supervision of representatives selling products and services to investors; broker-dealers entrusted with customer assets; and portfolio management and trading.
3. FINRA and MSRB
OCIE will continue to oversee FINRA by focusing examinations of the self-regulator's operations and regulatory programs and the quality of its examinations of broker-dealers and municipal advisors. OCIE also will examine MSRB to evaluate the effectiveness of select operations and internal policies, procedures and controls.
4. Digital Assets
Digital assets and initial coin offerings will occupy a “significant” amount of the SEC's time in 2019, Clayton said recently. “the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered,” securities laws must be followed, he said.
5. Cybersecurity
Each of OCIE's examination programs will prioritize cybersecurity with an emphasis on the proper configuration of network storage devices, information security governance and policies and procedures related to retail trading information security, for instance.

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6. Anti-Money Laundering Programs
Examiners will review compliance and anti-money laundering requirements, including whether firms are appropriately adapting their AML programs to address their regulatory obligations.

The Securities and Exchange Commission announced the 2019 examination priorities for compliance examinations and inspections late Thursday. Next year, according to the SEC’s Office of Compliance Inspections and Examinations, emphasis will be put on digital assets, cybersecurity and investor issues like fees, expenses and conflicts of interest.   

“OCIE continues to thoughtfully approach its examination program, leveraging technology and the SEC staff’s industry expertise,” according to SEC Chairman Jay Clayton.  “As these examination priorities show, OCIE will maintain its focus on critical market infrastructure and Main Street investors in 2019.”

The SEC says that these priorities “are not exhaustive and will not be the only issues OCIE addresses” in its examinations, Risk Alerts and and outreach programs.

OCIE is responsible for conducting exams of entities registered with the SEC, including more than 13,200 investment advisers, about 10,000 mutual funds and exchange traded funds, some 3,800 broker-dealers, about 330 transfer agents, seven active clearing agencies, 21 national securities exchanges, nearly 600 municipal advisors, the Financial Industry Regulatory Authority, the Municipal Securities Rulemaking Board and several other entities.

“OCIE is steadfast in its commitment to protect investors, ensure market integrity and support responsible capital formation through risk-focused strategies that improve compliance, prevent fraud, monitor risk, and inform policy,” said OCIE Director Pete Driscoll, in a statement.

“We believe our ongoing efforts to improve risk assessment and maintain an open dialogue with market participants advance these goals to the benefit of investors and the U.S. capital markets,” he added.

Check out the gallery for a look at what SEC examiners will have their eyes on in 2019.

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