The SEC recently announced its Office of Compliance Inspections and Examinations’ (OCIE) 2017 priorities. Though these listed priorities are not exhaustive and remain flexible in light of market conditions, industry developments, and ongoing risk assessment, it is helpful for companies to keep these items in mind when evaluating securities compliance programs in 2017.

The 2017 examination priorities include the following:

  • Retail Investors – Taking issue with industry marketing methods, the OCIE continues its 2016 initiatives to protect retail investors by assessing the risks to investors seeking information, advice, products, and services. OCIE looks to direct its examinations to review firms involved with “robo-advising” (delivering investment advice through electronic mechanisms) and wrap fee programs (when a single bundled fee for advisory and brokerage services is charged to an investor).
  • Senior Investment and Retirement Investments – OCIE will continue to scrutinize public pension advisers while expanding its focus on those services targeting senior investors and individuals investing for retirement. OCIE carefully reviews registrants’ interactions with senior investors, including the identification of financial exploitation. OCIE is also widening its ReTIRE initiative to include reviews of 1) investment advisers and broker-dealers that provide insurance products to investors with retirement accounts, and 2) investment advisors that offer and manage target-date funds.
  • Market-Wide Risks – OCIE will focus on registrants’ compliance with the SEC’s Regulation SCI and anti-money laundering rules, fulfilling the SEC’s mission for maintaining fair, orderly, and efficient markets. New in 2017, OCIE will evaluate money market funds’ compliance with the SEC’s amended rules (recently effective in October 2016).
  • FINRA – OCIE will conduct inspections of FINRA’s operations and regulatory programs, focusing resources on assessing the examinations of individual broker-dealers.
  • Cybersecurity – OCIE will continue to examine firm cybersecurity compliance procedures and controls. This includes implementation testing of those procedures and controls at broker-dealers and investment advisers.

Outgoing SEC Chair Mary Jo White noted, “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 added, “OCIE’s priorities identify where we see risk to investors so that registrants can evaluate their own compliance programs in these important areas and make necessary changes and enhancements.”

While newly tapped SEC Chair Jay Clayton has not had a chance to weigh in on the 2017 examination priorities, firms providing investor services should review and update their compliance programs to best position themselves in the new year.