The SEC’s Office of Compliance Inspection and Examinations (OCIE) said areas of focus will be electronic investment advice, also known as robo-advice; the financial exploitation of older investors; and money market funds.
“These priorities make clear we are continuing to focus on a wide range of issues impacting our markets, from traditional areas such as market-wide risks to new forms of technology including automated investment advice,” said SEC chair Mary Jo White.
“Whether it is protecting our most vulnerable senior investors or those investing in the trillion dollar money market fund industry, OCIE continues its efficient and effective risk-based approach to ensure compliance with our nation’s securities laws.”
OCIE director, Marc Wyatt said: “OCIE’s priorities identify where we see risk to investors so that registrants can evaluate their own compliance programmes in these important areas and make necessary changes and enhancements.”
Priorities
The 2017 examination priorities address issues across a variety of financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, clearing agencies, private fund advisers, national securities exchanges, and municipal advisors.
Areas of examination focus include, but are not limited to:
Retail Investors – Protecting retail investors remains a priority in 2017. OCIE will continue several 2016 initiatives to assess risks to retail investors seeking information, advice, products, and services. It also will undertake examinations to review firms delivering investment advice through electronic mechanisms, sometimes referred to as “robo-advising,” as well as wrap fee programs in which investors are charged a single bundled fee for advisory and brokerage services.
Senior Investors and Retirement Investments – OCIE also is continuing its focus on public pension advisers and expanding its focus on senior investors and individuals investing for retirement. OCIE is broadening its ReTIRE initiative to include reviews of investment advisers and broker-dealers that offer variable insurance products to investors with retirement accounts as well as those advisers that offer and manage target-date funds. OCIE also will focus more specifically on registrants’ interactions with senior investors, including with respect to identifying financial exploitation.
Financial Industry Regulatory Authority (Finra) – Consistent with OCIE’s goal of enhancing oversight of FINRA to protect investors and the integrity of our markets, it will continue conducting inspections of FINRA’s operations and regulatory programs, and focus resources on assessing the examinations of individual broker-dealers.
Cybersecurity – OCIE will continue its ongoing initiative to examine for cybersecurity compliance procedures and controls, including testing the implementation of those procedures and controls at broker-dealers and investment advisers.
