Episode 65: The SEC’s Examination Priority Areas for Advisers & Broker-Dealers in 2020

Lead Sr. Compliance Consultant Tina Mitchell joins us to discuss the SEC’s examination priority areas for advisers and broker-dealers in 2020 on Episode 65 of the CCO Buzz.


CCO Buzz: Hello and welcome back to the CCO Buzz! With the new year in full swing, now is the perfect time to look ahead at the Security and Exchange Commission’s examination priorities for 2020. Luckily, the SEC released their list of exam priorities earlier this month. Here to guide us through the report, and speak specifically on what is says regarding advisers and broker-dealers, is Lead Sr. Compliance Consultant Tina Mitchell. Let’s jump right in!

Tina Mitchell:  So earlier this month, the SEC’s Office of Compliance Inspections and Examinations, which is commonly referred to as OCIE, issued their report on the list of priority areas they’re going to focus on during exams of, among others, advisers and broker-dealers in 2020. 

For advisers, they’re going to continue to focus on the sales practices and conflicts pertaining to retail investors, seniors, those saving for retirement, and others.  And in the report, OCIE stated that they will look at advice provided to these types of investors, along with the types of investment products being recommended to the investors, such as mutual funds, ETFs, municipal securities, [and] microcap securities.

Specifically, in the report OCIE stated the following: 

“It is critically important that registered firms provide investors with the disclosures required by the federal securities laws, including those relating to fees and expenses, and conflicts of interest, which will help enable the investor public to make better informed choices.  Registered firms must effectively implement controls and systems to ensure those disclosures are made as required and that a firm’s actions match those disclosures.”

So OCIE is also continuing to look at client information security, cybersecurity, and for 2020 they said their focus is going to be, among other things, on protecting client non-public information, including: governance and risk management, assessment (access) controls, data loss prevention, vendor management, training, and incident response. The report actually outlined that OCIE’s  also focusing on oversight of service providers and network solutions, including cloud-based storage.

For Broker-Dealers, OCIE’s report listed areas such as, safety of client cash and securities, risk management, trading activity, best execution and payment for order flow.  They also listed AML programs, and they’re looking to ensure Brokers are adhering to their regulatory obligations in this area.

If you haven’t yet reviewed the report, you should do so soon.  A copy of the report can be found on the SEC’s website at www.sec.gov.

Compliance Officers should provide copies to senior management, and its very important to make sure your compliance programs are robust, especially in the risk areas noted by OCIE that are applicable to your business practices. 

Core Compliance consultants are here to help, so please feel free to contact us at 619-278-0020 or info@corecls.com  Thank You.

CCO Buzz: Well that’s it for this week’s episode. If you’d like additional information, please check out our website at www.corecls.com. You can also follow us on Facebook, LinkedIn, or Twitter @CoreCls. Thank you, and we hope you tune-in to next week’s episode of the CCO Buzz.


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