Each January, The SEC’s National Exam Program (“NEP”) issues examination priorities for the year ahead. The priorities are based upon the SEC’s evaluation of those areas in the financial markets that it believes will be presenting a risk of harm to investors, the markets, or capital formation.
The NEP has four program areas: 1) Investments advisers, 2) broker-dealers, 3) exchanges and SRO’s, and 4) clearing and transfer agents. Recall that the SEC and State regulators split the regulatory oversight for investment advisers with the SEC retaining jurisdiction over the “larger AUM” RIA’s.
The 2014 NEP priorities for investment adviser agents and registered investment advisers included safety of assets and custody and conflicts of interest and marketing claims related to investment objective and performance. In the opinion of this author, one would think Fisher Investments endured a substantial SEC exam in 2014 in light of these priorities. The SEC is already foreshadowing what will be included in the list for 2015.
Hearsay and rumors in our corner of the market indicate that the SEC is currently concerned about investment adviser sales practices related to 401(k) to IRA rollovers. If it is indeed a 2015 priority, there will certainly be several large RIA’s under the microscope. Of no surprise, word on the street is that the priority list will include cyber security and dual registrations. As for the broker-dealer area: it looks like costly mutual funds and “bad brokers” will be an SEC priority for 2015. But enough speculation – we should have the list in a matter of weeks. In the meantime, let us know if we can help you with your compliance or litigation needs. Food for thought.