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Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

SEC Announces Exam Priorities

Posted in Books and Records, Broker-Dealer Regulation, Compliance and Supervision, Hedge and Private Equity Funds, Investment Adviser Regulation, Investment Company Regulation, SEC Compliance, SEC Enforcement

Tis the season for the regulators to announce their examination priorities.  No less than the SEC’s Office of Compliance Inspections and Examinations released its 2014 Examination Priorities for its National Examination Program (“NEP”).

In particular, the SEC identified several new issues for registered investment advisers, primarily for those RIAs, who are at least three years old and have never been examined; as well as continued presence exams for hedge and private equity managers; wrap fee programs; quantitative trading models; and disguised distribution payments.  OCIE will also continue to examine for failure to comply with the custody rule; conflicts of interest, including, but not limited to, undisclosed compensation and allocation of investment opportunities, and performance marketing; alternative investment strategies for registered funds; money market fund stress testing; securities lending; senior management meetings concerning risk management; IT systems’ supervision; dual registrants and suitability; private placement solicitations; and IRA rollovers.  OCIE stated that these priorities also apply to  broker-dealers, clearing agencies, and transfer agents.  See http://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2014.pdf.

In short, given these priorities, it looks to be an interesting year for securities entities subject to the SEC’s jurisdiction.