Articles & Alerts
SEC Announces 2018 Compliance Examination Priorities
As they have for many years, the SEC announced its 2018 Office of Compliance Inspections and Examinations (OCIE) examination priorities. While OCIE will consider other issues in examinations, they will be especially focused on five areas:
- Protection for Retail Investors
- Compliance and Risk in Critical Market Infrastructure
- Cybersecurity
- Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB)
- Anti-Money Laundering
Retail Investors
Protecting retail investors remains a top priority for OCIE, especially seniors and those saving for retirement. OCIE examinations will focus on the proper calculation and disclosure of fees to clients as well as the supervision of representatives and execution of customer orders in fixed income securities.
OCIE also is concentrating on cryptocurrencies and Initial Coin Offerings (ICOs). Registrants who offer and sell these investments must offer adequate disclosures to investors about the risks in these instruments
Compliance and Risk in Market Infrastructure
OCIE will continue examining entities that are critical to the functioning of effective markets. This includes clearing agencies, national securities exchanges and transfer agents. OCIE will examine their operations and compliance with recently effective rules.
FINRA and MSRB
OCIE shifted more of the responsibility for investigating investment advisers to FINRA. OCIE’s 2018 focus will be on ensuring that the routine exams handled by FINRA are meeting the SEC’s standards. OCIE will also examine the MSRB and the effectiveness of its operations, procedures and controls.
Cybersecurity
OCIE will evaluate cybersecurity practices with special focus on risk assessment, data loss prevention, training, access rights, vendor management and incident response.
Anti-Money Laundering
OCIE examiners will be making sure firms are keeping up with AML requirements including updating their in-house AML programs for the most recent regulatory obligations.
The SEC noted that this list is not exhaustive and that they could announce additional priorities throughout the year. However, this initial announcement shows where firms should focus their attention as they prepare.
For more information on the 2018 examination priorities, please visit the SEC’s press release or feel free to contact a member of Anchin’s Financial Services Practice.