Reg BI Remains Top Priority for 2023 Exams

Three areas of focus will be environmental, social and governance focused investing; private funds; and standards of conduct, Best relayed.

As to ESG, the agency will “look to see whether advisors and funds are clearly and accurately disclosing their ESG investing approaches and have adopted and implemented policies and procedures and practices to prevent violations of the federal securities laws” in connection with ESG disclosures.

The size, complexity and growth of the private funds market remains a “significant” area of focus, Best said. “More than 35% of all RIAs manage private funds assets — that’s a 70% increase in assets managed by advisors to private funds in just the last five years.” In this area, the division will review advisors’ fiduciary duty and assess risks — including compliance programs and fees and expenses, custody and conflicts.

New Marketing Rule Compliance

As to the SEC’s new Marketing Rule, which had a Nov. 4 compliance date, William Birdthistle, head of the Investment Management division, said at the seminar he “would very much encourage a rigorous compliance with the rule.”