Jan 29, 2019

SEC's National Examination Priorities for 2019: According to Office of Compliance Inspections and Examinations (OCIE)

The U.S. Securities and Exchange Commission (SEC) regulates approximately 3,800 broker-dealers and more than 13,000 registered investment advisers (RIAs) with at least $84 trillion of assets under management. These are the 2019 priorities the SEC recently expressed.

i) Cybersecurity 

Generally, cybersecurity refers to internal and external access rights to trading systems, client accounts, data loss and wrongful asset transfers. The SEC will continue to monitor incident response, access rights and prevention of data loss.

ii) Seniors, retail investors and those saving for retirement

OCIE will focus on “main street” investors by examining the calculation of fees, expenses and other charges, the disclosure of same, conflicts of interests and digital assets.

iii) Anti-Money Laundering (AML)

Examiners will delve into the sufficiency of AML programs, whether they address other regulatory obligations, i.e., filing a Suspicious Activity Reports (SARs) and whether they continue to adapt to changes over time.

iv) Self-Regulatory Organizations (SROs)

The SEC regulates: 1) Municipal Securities Rulemaking Board (MSRB); and 2) Financial Industry Regulatory Authority (FINRA). The SEC will evaluate effectiveness of internal procedures and policies, controls and select operations of these SROs.

v) Compliance and risks to vital market infrastructure

OCIE plans to examine those entities vital to proper functioning capital markets. These include transfer agents, clearing agencies and securities exchanges as well as their operations and compliance responsibilities vis a vie new rules.                                

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.

Client alert authored by Andrew S. May, Principal