SEC Office of Compliance Inspections and Examinations Releases Its 2015 Priorities

The SEC Office of Compliance Inspections and Examinations ("OCIE") released its 2015 Examination Priorities for market participants and national securities exchanges. The list of priorities pinpoints issues involving investment advisers, broker-dealers and transfer agents. The OCIE stated that it plans to focus its efforts on examining the protection of retail investors, particularly investors saving for retirement. The OCIE added that it intends to examine initiatives to assess risks to retail investors, including (i) fee selection in relationships in which dual registrants offer a variety of fee structures and reverse churning, (ii) sales practices, (iii) suitability, (iv) branch office supervision, (v) "alternative" SEC-registered investment companies and (vi) fixed-income SEC-registered investment companies.

The OCIE also explained that it will examine broad structural risks and trends that involve multiple firms or entire industries. The OCIE announced additional areas on which it intends to focus, including (i) large firm monitoring and cybersecurity, (ii) clearing agencies and (iii) equity order routing conflicts.

The OCIE also noted that the SEC will implement specific enhancements in its data analytics capabilities to allow for more efficient examinations in areas such as (i) recidivist representatives, (ii) microcap fraud, (iii) excessive trading and (iv) anti-money laundering.

Regarding new initiatives, the OCIE identified the following: (i) municipal advisors, (ii) proxy advisory services, (iii) risk-based assessments of investment company complexes, (iv) fees paid to advisers to private equity funds and (v) transfer agents, particularly those acting as agents for microcaps and other small issuers.

Separately, the OCIE released its 2015 Examination Priorities Letter concerning the securities exchanges. In the letter, the OCIE explained that it intends to focus its examination efforts on the following areas:

• compliance with undertakings imposed by applicable Orders Instituting Administrative and Cease-and-Desist Proceedings;
• internal controls surrounding regulatory responsibilities and decisions;
• the monitoring and enforcement by exchanges of initial and continued listing standards for exchange-traded products;
• coordination with the SEC Office of Compliance Inspections and Examinations regarding the management of information technology; and
• compliance with obligations under Exchange Act Section 31 and Rule 31.

See: OCIE Examination Priorities for 2015; 2015 Examination Priorities Letter to National Securities Exchanges.
Related news: FINRA Releases 2015 Regulatory and Examination Priorities Letter (January 6, 2015); SEC Announces Its 2014 Examination Priorities (January 9, 2014).