National Examination Program's 2015 Priorities

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In the last CCLS blog we highlighted our 2015 Compliance Predictions , shortly before the Securities and Exchange Commission (“SEC”) released the National Examination Program’s priorities for 2015.

The list, which is relatively short compared to previous years’, effects investment advisers, broker-dealers, and transfer agents.

This year’s examination priorities are as follows:

Retail Investors and Investors Saving for Retirement 

  • An uncertain economy has increased the number of investors who are “more dependent on their investments for retirement.” Because Advisers are offering more products, many of which were previously considered as “alternative or institutional”, the SEC is “planning various examination initiatives to assess risks to retail investors that can arise from these trends.”

Market-Wide Risks 

  • The SEC will continue to focus on overall market risks including, large firm monitoring, clearing agencies, cybersecurity and potential equity order routing conflicts.

Data Analyzing

  • The Office of Compliance Inspections and Examinations (OCIE), an SEC department that “administers the nationwide examination and inspection program,” will focus on “registrants and firms that appear to be potentially engaged in fraudulent and/or other potential illegal activity.”

The SEC has significantly expanded its regulatory examination program, and continues to make efforts to strengthen its risk-based approach to the National Examination Program. The federal securities laws authorize the SEC to conduct examinations of all records maintained by SEC-registered firms at such times as the SEC deems necessary or appropriate in the public interest or for the protection of investors

Many firms are reacting by increasing their focus on risk management and compliance, and undergoing a mock SEC examination. By having an independent third party help assess operations and risk management, firms are in a better position to address potential problem areas before they are uncovered by the SEC in a “real” examination.

For more information on this and other related subjects, please contact us at info@corecls.com or (619) 278-0020.