Meet the SEC's Examination Priorities for 2016

Investing

Published: January 11, 2016 1:40 pm

Last Updated: January 13, 2020 3:11 pm

The U.S. Securities and Exchange Commission (SEC) has just announced 2016 priorities of its Office of Compliance Inspections and Examinations (OCIE). The new areas of focus in 2016 will include liquidity controls, public pension advisers, product promotion and two popular investment products: exchange traded funds and variable annuities.

These priorities also reflect a continuing focus on protecting investors in ongoing risk areas such as cybersecurity, microcap fraud, fee selection and reverse churning.

The 2016 examination priorities address issues across a variety of financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, clearing agencies and national securities exchanges.

Areas of examination include:

Retail Investors – Protecting retail investors, including those investing for retirement, remains a priority in 2016. OCIE will continue several 2015 initiatives to assess risks to retail investors seeking information, advice, products, and services to help them plan for and live in retirement. It also will undertake examinations to review exchange-traded funds (ETFs) and ETF trading practices, variable annuity recommendations and disclosure, and potential conflicts and risks involving advisers to public pension funds.

Market-Wide Risks – To help fulfill the SEC’s mission of maintaining fair, orderly, and efficient markets, OCIE will continue its focus on cybersecurity controls at broker-dealers and investment advisers. New initiatives for 2016 include an evaluation of broker-dealers’ and investment advisers’ liquidity risk management practices, and firms’ compliance with the SEC’s Regulation SCI, designed to strengthen the technology infrastructure of the U.S. securities markets.

Data Analytics – OCIE’s enhanced ability to analyze large amounts of data will assist examiners’ ongoing initiatives to assess anti-money laundering compliance, detect microcap fraud, and review for excessive trading. Data analytics also will help examinations focused on promotion of new, complex, and high-risk products.

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Mary Jo White, chair of the SEC, commented:

These new areas of focus are extremely important to investors and financial institutions across the spectrum. Through information sharing and conducting comprehensive examinations, OCIE continues to promote compliance with the federal securities laws to better protect investors and our markets.

Marc Wyatt, director of the OCIE, added:

For the last four years, OCIE’s transparency and information sharing has helped inform the industry. We hope that registrants will use this information to inform the evaluation of their own compliance programs in these key areas.

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