On February 7, 2018, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) announced the 2018 examination priorities. The exam priorities are published to improve compliance, prevent fraud, monitor risk and implement policy.
This year, the priorities have been grouped into five main categories:
- Compliance and Risks in Critical Market Infrastructure: OCIE will continue to examine entities that provide services to capital markets. OCIE will administer examinations for firms that include, among others, clearing agencies, national securities exchanges, and transfer agents.
- Retail Investors: This topic includes seniors and those saving for retirement. OCIE acknowledges protecting Main Street investors as a continuing priority for 2018. OCIE will administer examinations and focus on the disclosure and calculation of fees, expenses, and other charges investors pay, the supervision of representative selling products and services to investors, and the execution of customer orders in fixed income securities. OCIE will continue to inspect cryptocurrencies and initial coin offerings to ensure that investors receive clear disclosures about the potential risks involved with these types of investments.
- FINRA and MSRB: OCIE will continue to monitor the quality of FINRA’s examinations and the effectiveness of select operations and internal policies and procedures executed by MSRB.
- Cybersecurity: All OCIE examinations will emphasize, at minimum, the governance and risk assessment, access rights and controls, data loss prevention, vendor management, training, and incident response.
- AML Programs: All examiners will review for compliance and assess whether firms are appropriately adapting their AML programs to address their current regulatory obligations.
WHAT DOES THIS MEAN FOR ME?
The published priorities for 2018 are not all-inclusive. Additional priorities may be added as market conditions vary or as OCIE finds reoccurring risks and trends. The effort to develop the examination priorities begins with feedback from examination staff, who are uniquely exposed to practices, produces and services that may evolve into significant risks to investors or the financial market.
As always, Fairview is dedicated to ensuring its’ clients are prepared for SEC examinations. Please contact Fairview with any questions or concerns you might have about this recent SEC announcement and how it could relate to your firm.