The Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) will focus its priorities in 2019 on digital assets, cybersecurity, and matters of importance to retail investors, including fees, expenses, and conflicts of interest.
The OCIE posts its exam priorities each year to promote transparency of its examination program while providing insights into the areas it believes present potentially heightened risk to investors or U.S. capital markets.
“OCIE continues to thoughtfully approach its examination program, leveraging technology and the SEC staff’s industry expertise,” SEC Chairman Jay Clayton said. “As these examination priorities show, OCIE will maintain its focus on critical market infrastructure and Main Street investors in 2019.”
Specifically, the OCIE’s 2019 examination priorities are broken down into six categories: compliance and risk at registrants responsible for critical market infrastructure; matters of importance to retail investors, including seniors and those saving for retirement; Financial Industry Regulatory Authority (FINRA) and Municipal Securities Rulemaking Board (MSRB); digital assets; cybersecurity; and anti-money laundering programs.
“OCIE is steadfast in its commitment to protect investors, ensure market integrity and support responsible capital formation through risk-focused strategies that improve compliance, prevent fraud, monitor risk, and inform policy. We believe our ongoing efforts to improve risk assessment and maintain an open dialogue with market participants advance these goals to the benefit of investors and the U.S. capital markets,” OCIE Director Pete Driscoll said.
While these are priorities, they are not the only issues OCIE will address in its examinations, risk alerts, and investor and industry outreach. The effort to formulate the annual examination priorities starts with feedback from examination staff, which identify the practices, products, and services that may pose a significant risk to investors or the financial markets. OCIE staff also seek the advice of the SEC chairman and commissioners, as well as SEC staff and fellow regulators.
OCIE is responsible for conducting examinations for more than 13,200 investment advisers, approximately 10,000 mutual funds and exchange-traded funds, roughly 3,800 broker-dealers, about 330 transfer agents, seven active clearing agencies, 21 national securities exchanges, and nearly 600 municipal advisors, among others. The exam results are used by the SEC to inform rule-making initiatives, identify risks, improve industry practices, and pursue misconduct.