[co-author: Lauren Henderson]
Each year, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) releases its priorities for the upcoming fiscal year. OCIE publishes its priorities in order to improve compliance, prevent fraud, monitor risk, and inform policy.[1] Knowing and understanding OCIE’s priorities is essential for all regulated entities, including registered investment advisers and investment companies.
OCIE’s examination priorities for the 2018 fiscal year are the following:[2]
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Compliance and risk in critical market infrastructure.
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OCIE will examine entities critical to the “proper functioning of capital markets” such as clearing agencies, national securities exchanges, and transfer agents.[3]
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Retail Investors, including seniors and those saving for retirement.
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OCIE examiners will focus on disclosures and charges paid by investors in addition to monitoring the growth of cryptocurrencies and initial coin offerings.[4]
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FINRA and the MSRB
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OCIE exams will focus on “FINRA’s operations and regulatory programs and the quality of FINRA’s examinations.”[5] OCIE will examine the MSRB to assess “the effectiveness of select operations and internal policies, procedures, and controls.”[6]
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Cybersecurity
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Examiners will continue to emphasize a variety of cybersecurity issues, including, but not limited to, governance and risk assessment, data loss prevention, vendor management, and incident response.[7]
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Anti-Money Laundering Programs
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OCIE exams will emphasize compliance with anti-money laundering requirements.[8] In particular, examiners will evaluate whether firms are tailoring their anti-money laundering programs to address their particular regulatory obligations.[9]
As always, the published priorities are not an exhaustive list of issues OCIE will examine and address in the fiscal year. Firms should be sure that the stated priorities are adequately addressed within their practices and procedures, but also work to comply with standing regulatory obligations. If you have any questions related to OCIE’s priorities or your regulatory obligations generally, please feel free to contact us.
[1] SEC, SEC Office of Compliance Inspections and Examinations Announces 2018 Examination Priorities (Feb. 7, 2018), available at https://www.sec.gov/news/press-release/2018-12.
[2]Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
