Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

SEC Announces 2015 Exam Priorities

Author: Dan Brecher

Date: January 30, 2015

Key Contacts

Back

Don’t say you haven’t been warned! In January, the Securities and Exchange Commission (SEC) announced its 2015 exam priorities for the coming year.

In regards to the 2015 exam priorities, the report should be required reading for all investment professionals under the agency’s purview, most notably investment advisers, broker-dealers, and transfer agents.

“We share our 2015 examination priorities to promote compliance,” said Andrew J. Bowden, Director of the agency’s Office of Compliance Inspections and Examinations (OCIE). “We have observed that when we share our areas of focus, many industry participants independently review their controls in the areas we have identified.”

According to the SEC, its specific priorities revolve around three areas: protecting retail investors, especially those saving for or in retirement; assessing market-wide risks; and using data analytics to identify signs of potential illegal activity. Below are specific issues that the OCIE identified in its report:

Newly registered advisers

Examiners will continue to target newly registered municipal advisors to assess their compliance with recently adopted SEC and Municipal Securities Rulemaking Board rules. Similarly, the SEC will also continue its efforts to examine selected registered investment companies that have not yet been examined.

Fees and Expenses in Private Equity

Citing the high rate of deficiencies that it has observed among advisers to private equity funds in connection with fees and expenses, the SEC plans to continue to conduct examinations in this area.

Large-firm monitoring

The agency plans to monitor the largest U.S. broker-dealers and asset managers for the purpose of assessing risks at individual firms and maintaining early awareness of developments industry-wide.

Cybersecurity

The SEC expects to continue and expand its initiative to examine broker-dealers’ and investment advisers’ cybersecurity compliance and controls.

Branch offices

The SEC will scrutinize the supervision of registered representatives and financial adviser representatives in branch offices, including using data analytics to identify branches that may be deviating from compliance practices of the firm’s home office.

Suitability

The SEC intends to evaluate registered firms’ recommendations or determinations to invest retirement assets into complex or structured products and higher yield securities, including whether the due diligence conducted, the disclosures made, and the suitability of the recommendations or determinations are consistent with existing legal requirements.

Fee selection

For advisers that offer a range of fee structures, the SEC will evaluate the recommendations of account types and whether they are in the best interest of the client at the inception of the arrangement and thereafter, including fees charged, services provided, and disclosures made about such relationships.

Transfer agents

The SEC intends to allocate more resources to examine transfer agents, particularly those that are involved with microcap securities and private offerings.

Data analytics

The agency plans to use its growing capabilities to pursue initiatives involving microcap fraud, excessive trading, anti-money laundering programs, and recidivist brokers.

Despite a stated lack of resources, the SEC is still working to prove that it can handle the growing task of examining financial advisers as well as preventing securities fraud before it harms investors. Accordingly, registered firms should be prepared to face a heightened enforcement environment for the foreseeable future.

Are you on top of the 2015 exam priorities? What was your experience? Feel free to leave a comment in the section below.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Supreme Court and Title VII: Implications for Reverse Discrimination post image

Supreme Court and Title VII: Implications for Reverse Discrimination

Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]

Author: Matthew F. Mimnaugh

Link to post with title - "Supreme Court and Title VII: Implications for Reverse Discrimination"
SPACs Are Back, What You Need to Know post image

SPACs Are Back, What You Need to Know

Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]

Author: Dan Brecher

Link to post with title - "SPACs Are Back, What You Need to Know"
Short Form Merger: Streamlining the Process for Businesses post image

Short Form Merger: Streamlining the Process for Businesses

Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]

Author: Dan Brecher

Link to post with title - "Short Form Merger: Streamlining the Process for Businesses"
Tariff Response Options for Small Businesses Facing Financial Distress post image

Tariff Response Options for Small Businesses Facing Financial Distress

The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]

Author: Brian D. Spector

Link to post with title - "Tariff Response Options for Small Businesses Facing Financial Distress"
Common Causes of Partnership Disputes and How to Resolve Them post image

Common Causes of Partnership Disputes and How to Resolve Them

Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]

Author: Christopher D. Warren

Link to post with title - "Common Causes of Partnership Disputes and How to Resolve Them"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!