January 11, 2016
The SEC announced its examination priorities for 2016, as outlined below.
- Private Fund Advisers: The SEC’s examination of private fund advisers will focus on fees and expenses evaluating, among other things, the controls and disclosures associated with side-by-side management of performance-based and purely asset-based fee accounts.
- Never-Before-Examined Investment Advisers and Investment Companies: The SEC will continue to conduct focused, risk-based examinations of select registered investment advisers and investment complexes that have not yet been examined.
- Cybersecurity: The SEC will advance its efforts specific to cybersecurity, including the testing and assessment of investment advisers’ and broker-dealers’ implementation of compliance procedures and controls.
- Private Placements: The SEC will continue to review private placements, including offerings involving Regulation D of the Securities Act of 1933 or the Immigrant Investor Program, to evaluate whether legal requirements are being met in the areas of due diligence, disclosure and suitability.
- Fee Selection and Reverse Churning: The SEC will continue to examine investment advisers and dually-registered investment adviser/broker-dealers that offer retail investors a variety of fee arrangements- asset-based fees, hourly fees, wrap fees and commissions.
- Use of Data Analytics: The SEC will use data analytics to identify signals of potential illegal activity, including but not limited to the following areas: anti-money laundering; microcap fraud; recidivist representatives and their employers; excessive trading; and product promotion.