The SEC’s Office of Compliance Inspections and Examinations (OCIE) released its examination priorities for 2019 in order to promote the transparency of its investigation program. OCIE grouped its examination priorities into six categories:
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Compliance and risk of registrants responsible for critical market infrastructure. These registrants include clearing agencies, national securities exchanges and transfer agents. Examinations will focus on operations and compliance with rules that have recently taken effect.
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Matters of importance to retail investors. Part of OCIE’s focus will be on seniors and those saving for retirement. It will closely examine the disclosure and calculation of fees, expenses and other charges paid by investors. OCIE will also look at the supervision of representatives selling products to investors, broker-dealers entrusted with customer assets, and portfolio management and trading. In this regard, OCIE will focus on whether there is adequate disclosure of, and controls around, conflicts of interest such as the use of affiliated service providers and allocation of investment opportunities across clients.
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FINRA and MSRB. OCIE will continue its oversight of the Financial Industry Regulatory Authority (FINRA) by focusing on FINRA’s operations and regulatory programs and the quality of FINRA’s examinations of broker-dealers and municipal advisers. OCIE will also examine the Municipal Securities Rulemaking Board’s (MSRB) operations and internal policies, procedures and controls.
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Digital assets. OCIE will continue to monitor the offer and sale, trading and management of digital assets. This reemphasizes the SEC's ongoing vigilance in this area, which suggests continued enforcement activity involving cryptocurrencies and other digital assets.
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Cybersecurity. All OCIE examination programs will prioritize cybersecurity, with an emphasis on the proper configuration of network storage devices and on governance.
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Anti-Money Laundering. OCIE will review the sufficiency of firms’ AML programs.
OCIE cautioned that this list is not exhaustive, as its purpose is only to outline some of OCIE’s priorities. The list of priorities is based on observations by examination staff; on the advice of the SEC chair, commissioners and staff; and on consultation with other regulators.
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