In what has become a January tradition, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced its compliance priorities for the coming year. Registered Investment Advisers and broker-dealers should take note of these priorities as they fine-tune their compliance programs.

OCIE has not forgotten the priorities it announced in 2015. OCIE will continue working on its ReTIRE initiative, which was launched in June 2015. Examiners will look at whether a firm has a reasonable basis for recommendations made to investors. As part of its ReTIRE initiative, examiners will analyze firms’:

  • Conflicts of interest;
  • Supervision and compliance controls; and
  • Marketing and disclosure practices.

OCIE will continue its efforts to protect investors from cyber threats. Examiners will also remain focused on microcap fraud, fee selection, and reverse churning.

In addition, OCIE will be focused on new areas such as:

  • Potential conflicts and risks involving advisers to public pension funds;
  • Product promotion;
  • Liquidity controls;
  • ETFs; and
  • Variable annuities.

Examiners will look at whether a variable annuity was suitable for a client, as well as the adequacy of disclosures provided. They will make certain that firms are properly supervising these variable annuity transactions.

The SEC will be using data analytics in its efforts to protect investors. By analyzing huge amounts of data, examiners will be better equipped to spot recidivist representatives, as well as the firms that employ them. The data can also be used to evaluate the effectiveness of firms’ anti-money laundering programs. In addition, examiners will use that data to detect microcap fraud, excessive trading, and other non compliant activities.

OCIE’s examination priorities can be found at the following link: SEC Exam Priorities.

About RIA Compliance Group: RIA Compliance Group is an investment adviser compliance consulting firm based in Boca Raton, Florida. The firm’s mission is to provide affordable, timely, practical, and cost-effective compliance advice. We help investment advisers to comply with the myriad of state and SEC regulations and compliance obligations facing their firms. RIA Compliance Group takes pride in giving personal service and real world compliance advice, not theoretical concepts and legalese. The firm interacts on a daily basis with SEC and state securities regulators.

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