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OCIE Announces 2017 Examination Priorities 

by Scott H. Moss, Esq. and Ethan L. Silver, Esq

Published: January, 2017

Submission: January, 2017

 



Each year the Securities and Exchange Commission (“SEC”), through its Office of Compliance Inspections and Examinations (“OCIE”), issues a release identifying various areas in which the SEC plans to focus its efforts in examinations. This year the SEC announced its 2017 priorities on January 12 (the “Release”), prioritizing certain practices that OCIE has deemed to represent increased risk to investors, as well as activities that may have a detrimental impact on U.S. financial markets. The OCIE 2017 examination priorities reflect a number of new areas of focus, while still scrutinizing areas that continue to engage the SEC.


The Release offers guidance for registered investment advisers and broker-dealers regarding the areas the SEC will pay close attention to this year. As such, we advise that all federally registered investment advisers and broker-dealers familiarize themselves with the Release so as to best ensure compliance with applicable rules and regulations during 2017. It is important to note that the Release is not an exhaustive list. While the SEC will pay close attention to the areas outlined in the Release, the SEC will continue to closely monitor, among other areas, the misuse of material nonpublic information, the allocation of investments and expenses, conflicts of interest, affiliated service providers, and marketing.


In this article, we discuss the impact the Release will have on our clients, focusing primarily on its guidance with respect to electronic investment advice and retail investors, while also assessing other areas of particular concern that the Release has singled out as we begin the new year.OCIE’s priorities in the Release reflect certain practices and products that OCIE perceives to present potentially heightened risk to investors and/ or the integrity of the U.S. capital markets. While electronic investment advice, protection of retail investors, and financial exploitation of senior investors are areas of increased attention in 2017, OCIE will continue to assess various market-wide risks, such as cybersecurity and antimoney laundering. OCIE stresses the importance of these examination priorities in helping SEC registrants evaluate their compliance programs to make necessary changes and enhancements.




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