SEC Releases 2015 Examination Priorities
The staff of the SEC’s Office of Compliance and Inspections has issued its 2015 Examination Priorities, with an emphasis on protecting retail investors saving for retirement. The SEC staff will focus on reverse churning i.e. ensuring that the account types offered by an adviser are in the best interest of the client; sales practices especially recommendations to move assets out of employer-sponsored plans; product suitability; “alternative” investment companies; and fixed income funds. The OCIE staff will also look at market-wide risks such as large advisers and broker-dealers, cybersecurity, and order routing. Other issues targeted for special review include proxy voting, never-before examined investment companies, and private equity fees and expenses.
OUR TAKE: This may be the most important regulatory document published all year. Firms should prepare their compliance programs to address the issues identified or risk enforcement proceedings. The SEC’s focus on retail retirement assets represents a new emphasis, although the staff has identified several areas that it highlighted over the course of last year including reverse churning, private equity fees, and cybersecurity.