Home News SEC Examination Priorities Identify Fee Disclosures for Retail Investors

SEC Examination Priorities Identify Fee Disclosures for Retail Investors

The Securities and Exchange Commission's Office of Compliance Inspections and Examinations (OCIE) announced its 2018 examination priorities, which are published annually to improve compliance, prevent fraud, monitor risk, and inform policy.

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) announced its 2018 examination priorities, which are published annually to improve compliance, prevent fraud, monitor risk, and inform policy.

Of particular interest this year will be matters involving duties to retail investors, critical market infrastructure, and developments in cryptocurrency, initial coin offerings, and secondary market trading.

“As the markets continually evolve and the products and services available to investors adapt, OCIE remains committed in its risk-based examination program to prioritizing the interests of retail investors and examining those aspects of securities firms posing risks to investors and the proper functioning of our capital markets,” said OCIE director Pete Driscoll.

Retail investors, including seniors and those saving for retirement, continues to be a priority in 2018. Examinations will focus on the disclosure and calculation of fees, expenses, and other charges investors pay, the supervision of representatives selling products and services to investors, and the execution of customer orders in fixed income securities.

Another focus will be the oversight of FINRA with examinations geared towards FINRA’s operations and regulatory programs and the quality of its examinations of broker-dealers and municipal advisors.

OCIE will continue to monitor the growth of cryptocurrencies and initial coin offerings and examine registrants involved in their offer and sale so that investors receive adequate disclosures about the risks associated with these investments.

Each examination program will prioritize cybersecurity with an emphasis on governance and risk assessment, access rights and controls, data loss prevention, vendor management, training, and incident response.

OCIE will continue to examine entities that provide services critical to the functioning of capital markets, including clearing agencies, national securities exchanges, and transfer agents.

Examiners will review applicable anti-money laundering requirements for compliance, including whether firms are appropriately adapting their AML programs to address their regulatory obligations.

The OCIE says that additional priorities may be added in light of market conditions or if it identifies emerging risks and trends.

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