SEC Highlights Exam Priorities for 2024
The Securities and Exchange Commission’s Division of Examinations recently released its 2024 priorities, identifying the key risks and topics for the coming year. The SEC publishes these priorities to encourage firms to focus compliance efforts on these areas.
The below is not an exhaustive list of what might be focused on during an examination. Entity history, operations, services, products offered and other risk factors are all within scope. I sat down with colleague Thomas Kellerman to learn more about the SEC’s announced priorities.
RIA Exams
Advisors must be aware that investment advice regarding complex, illiquid and unconventional products will be scrutinized as well as advice suited for older investors saving for retirement.
Also, processes for determining that investment advice is provided in clients’ best interest will be reviewed. Examinations will address how advisors mitigate conflicts of interests and allocate investments to certain accounts, such as wrap fee, non-taxable and brokerage commission.
In particular, examination focus will include marketing practice assessments for whether advisors have: (1) adopted and implemented reasonably designed written policies and procedures to prevent violations of the Advisers Act and the rules thereunder including reforms to the Marketing Rule; (2) appropriately disclosed their marketing-related information on Form ADV; and (3) maintained substantiation of their processes and other required books and records.
Marketing reviews of disseminated advertisements (hypothetical performance, third-party ratings, testimonials) will continue to take place.
