The Securities and Exchange Commission’s exam division released Wednesday a risk alert identifying COVID-19-related issues, risks and practices that registered investment advisors and broker-dealers should be focused on.
The alert, issued by the agency’s Office of Compliance Inspections and Examinations, notes that market volatility related to COVID-19 “may have heightened the risks of misconduct in various areas that the staff believe merit additional attention.”
Observations and recommendations from SEC examiners cover six categories: protection of investors’ assets; supervision of personnel; practices relating to fees, expenses, and financial transactions; investment fraud; business continuity; and the protection of investor and other sensitive information.
Joshua Broaded, partner and co-head of US Regulatory Compliance at ACA Compliance Group, noted in a Wednesday email to ThinkAdvisor that the alert highlights risks “from both the direct implications of COVID-19, such as employees working in a fully remote environment, as well as emergent risks posed by an increase in market volatility and some firms pushing into new strategies and asset classes.”
At ACA, Broaded continued, “we are seeing additional client interest in data-driven surveillance, both related to market abuse and client trading, and related to employees’ personal trading.”