It is that time of year again. The SEC Office of Compliance and Inspection (OCIE) has announced its examination priorities for 2015. Knowing what these priorities are will help firms gauge their compliance and supervision efforts over the next year.
For firms that are in the retail sector, OCIE has identified particular areas of interest. These areas include the following: OCIE will focus on firm recommendations when there is a variety of fee arrangements and account structures at the firm.
- OCIE is focusing on whether the arrangements and the fees charged are in the best interest of the client.
- OCIE is looking into the use of improper or misleading sales practices when recommending the movement of retirement assets from employee-sponsored defined contribution plans into other investments, especially those with higher fees.
- OCIE is looking into the suitability of investing retirement assets into complex or structured products, including due diligence, and disclosures made to the investor.
- OCIE is looking into the supervision of branch offices, including using data analytics to identify branch offices that may be deviating from firm compliance.
- OCIE is continuing its focus on investment companies that are offering alternative investments.
- OCIE is looking into whether mutual funds with significant exposure to interest rates increases have implemented compliance policies, procedures and sufficient controls to ensure its disclosures are not misleading and that the investment profile is consistent with the disclosures.
Now that you know the SEC’s focus for the year ahead, ask yourself whether your firm is doing what it needs to do to answer the above issues with a positive response. If no such response is forthcoming, you need to revisit what you are doing and act accordingly, lest you be a firm OCIE focuses upon.
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