On The month of january 11, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) released its 2016 examination priorities for investment companies, investment advisors, broker-dealers and transfer agents. The examination priorities highlight new and ongoing regions of interest. One of the priorities listed would be the following products:
Retail and Retirement Investor Protection – ETFs
OCIE is going to be analyzing exchange-traded funds (ETFs) for compliance with relevant exemptive relief granted underneath the Securities Exchange Act of 1934 and also the Investment Company Act of 1940 with other regulatory needs. Additionally, OCIE will also be centered on ETF sales strategies, buying and selling practices and disclosures, including excessive portfolio concentration, secondary and primary market buying and selling risks, adequacy of risk disclosure, and appropriateness, specifically in niche or leveraged/inverse ETFs.
Assessing Market-Wide Risks – Cybersecurity
OCIE’s market-wide risk assessment will concentrate on evolving its September 2015 Cyber Security Examination Initiative through 2016. OCIE’s study of broker-dealers and investment advisors includes testing and assessments of firms’ implementation of cybersecurity procedures and controls.
Assessing Market-Wide Risks – Liquidity Controls for Fixed-Earnings Funds
OCIE will examine advisors to mutual funds, ETFs and funds which have contact with potentially illiquid fixed earnings securities. Broker-dealers who contain liquidity in fixed earnings securities will also be examined. These examinations includes overview of various controls, for example controls over market risk management, valuation, liquidity management, buying and selling activity and regulatory capital.
Other 2016 examination areas include, amongst other things, an emphasis on branch office supervision of representatives, appropriateness of variable annuities, public pension advisors, recently registered municipal advisors, private placements under Regulation D and also the Immigrant Investor Program (EB-5 Program), nothing you’ve seen prior examined advisors and investment companies, and advisors for charges and expenses and evaluating, amongst other things, the controls and disclosure connected with side-by-side control over performance-based and purely asset-based fee accounts.
Click the link to see the 2016 SEC Examination Priorities.
Click the link to see OCIE’s 2015 Cybersecurity Examinations Initiative.