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SEC Examination Priorities for 2016

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January 14, 2016
Client Alert

The Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) recently released its Examinations Priorities for 2016. A copy of the examination priorities letter is available here. While it does not provide an exhaustive list of examination focuses, OCIE’s letter focuses on issues involving investment advisers, broker-dealers, municipal advisors and transfer agents with a particular emphasis on protecting retail investors and investors saving for retirement, assessing market-wide risks and using data analytics to identify signals of potential illegal activity. Firms should review their policies, procedures and business activities in light of OCIE’s stated 2016 priorities. Firms should also review the Financial Industry Regulatory Authority, Inc.’s (“FINRA”) 2016 Regulatory and Examinations Priorities Letter which is described in our Client Alert available here.

Retail Investor Protection

Protecting retail investors and retirement savers remains a priority for OCIE in 2016, and it will likely continue to be a focus for the foreseeable future. In this respect, OCIE has indicated that it will focus on the following areas, among others, in conducting its 2016 examinations:

Assessing Market-Wide Risks

In 2016, OCIE will focus on the following initiatives related to assessing market-wide risks:

Use of Data Analytics

OCIE will utilize its data analytic capabilities to focus on:

Other Exam Initiatives

OCIE will also focus examination efforts on:

Conclusion

Firms should consider the SEC examination priorities along with recently released FINRA 2016 Regulatory and Examination Priorities Letter as they conduct their annual reviews of policies, procedures and business activities. Where firms observe deficiencies in their own practices, adjustments should be made before they find themselves the subject of a FINRA or SEC investigation, examination or enforcement action.

For More Information

To discuss any topic covered in this Client Alert, please contact a member of the Investment Management Group or visit us online at chapman.com.

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