OCIE Releases 2019 Examination Priorities

The Securities and Exchange Commission’s compliance wing announced its 2019 Examination Priorities, which provides a preview of key areas where it intends to focus its resources in the year ahead.

The Office of Compliance Inspections and Examinations announced it will focus its attention in 2019 on numerous areas.

Included in the report, the office said it would devote resources toward protecting retail investors, including seniors and those saving for retirement. This involves protecting Main Street investors through the disclosure and calculation of fees, expenses and other charges that retail investors pay as well as conflicts of interest.

Cybersecurity is also an area of importance. The office said it would cybersecurity enforcement a top priority by conducting risk assessments, proper configuration of network storage devices, information security governance and policies and procedures related to retail trading information security.

OCIE said it will maintain critical market infrastructure by scrutinizing the integrity, resiliency and security of service providers’ processes, procedures and systems vital to properly functioning markets, including clearing agencies, exchanges, transfer agents and alternative trading systems.

To achieve its goals, the SEC will continue to focus on the quality of self-regulatory organizations. The OCIE said it would center on the internal controls, operations and oversight of the Financial Industry Regulatory Authority and the Municipal Securities Rulemaking Board.

Compliance with anti-money laundering requirements, including whether firms are appropriately adapting their AML programs to address their regulatory obligations will also come under review.

For firms actively engaged in the digital asset market, the OCIE said it will conduct examinations focused on, among other things, portfolio management of digital assets, trading, safety of client funds and assets, pricing of client portfolios, compliance and internal controls.

The OCIE will continue to conduct risk-based examinations of advisers that have never been examined, including newly-registered investment advisers and those registered for several years but have yet to be examined. The OCIE will also prioritize examinations of advisers that have not been examined for a number of years and may have substantially grown or changed business models.

The OCIE’s examination priorities continue to outline the retail-investor and anti-fraud focuses of the SEC under Chairman Clayton.