SEC Examination Priorities for 2017

Examination Priorities

Each year the SEC Office of Compliance Inspections and Examinations publishes their SEC examination priorities letter to inform the industry of their current focus areas.  The 2017 letter was released on January 12, 2017, and is available on the SEC’s website.  The letter identified three thematic areas which were similar to 2016:

  1. Examining matters of importance to retail investors, including investors saving for retirement
  2. Focusing on risks specific to elderly and retiring investors
  3. Assessing market-wide risks

For ease of comparison, below is a table comparing 2017 priorities to the SEC’s 2016 exam priorities, showing what areas are new, which ones remain on the list and which ones have been removed.

 SEC 2017 Exam Priorities Graph for CW Blog

 

Key Takeaways on Some of the New Areas of Focus in 2017

Electronic Investment Advice – Firms that incorporate electronic advice into their business models need to have policies and procedures specific to this line of business and particularly with regard to oversight of the algorithms.

Wrap Fee Programs – Firms that participate in or sponsor wrap fee programs should review their policies and procedures in light of recent enforcement actions

Multi-Branch Advisers – On December 12, 2016, the SEC released a Risk Alert on their Multi-Branch Adviser Initiative.  Advisory firms that have multiple locations should review SEC Staff Bulletin 17 – Remote Office Supervision and adopt appropriate policies and procedures.

Senior Investors – The SEC and FINRA have jointly undertaken a National Senior Investor Initiative as described in a press release issued on April 15, 2015.  They also jointly issued a report on findings which is very helpful and should be referenced by all firms dealing with senior investors.  Firms should have policies and procedures addressing, at a minimum, three senior issues: diminished capacity, elder abuse and marketing to senior investors.

Chief Compliance Officers should review their firm’s business practices to determine if enhancements are needed in light of the SEC’s exam focus areas.  The CCLS team is well versed in these areas and can help firms create and implement appropriate policies and procedures and internal controls.  For more information, please contact us at info@corecls.com or (619) 278-0020.