In early January, both the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) and FINRA announced their examination priorities for 2017. As in previous years, both the SEC and FINRA share many examination priorities, a number of which are aimed at protecting retail investors, focusing on risks specific to senior investors, and managing market-wide risks. Although many of the identified priorities are carryovers from prior years, there also are some notable new themes and takeaways. During the past year, OCIE has announced that it will be shifting examination resources toward registered investment advisers and away from broker-dealers. As a result, OCIE’s 2017 priorities include greater focus on its oversight of FINRA, which now has greater responsibility for conducting exams of registered broker-dealers. Both OCIE and FINRA emphasized their expanded capabilities to analyze data and the role that data analysis plays in their exam programs. Notably, in 2017 FINRA will initiate off-site, electronic reviews of a select group of firms not currently scheduled for a cycle examination in 2017. FINRA also announced that, starting this year, it will publish a summary report outlining key exam findings to alert firms to key regulatory issues and trends.

Both priority letters provide firms with a helpful guide as to what compliance programs and business operations should be evaluated in the coming year. As with most things, an ounce of prevention is worth a pound of cure, so these letters also provide a roadmap to areas that could be ripe for proactive assessment and remediation to prevent more costly exposure to enforcement actions down the road.