Each year, the SEC’s Division of Examinations reviews the practices, products and services of SEC-registered entities for the risks they pose to investors and capital markets and issues priorities based on those risks.
The Division’s fiscal year 2024 priorities target four areas:
- Cybersecurity and operational resiliency
- Crypto assets and emerging fintech
- Regulation systems compliance and integrity
- Anti-money laundering
Within those areas, investment advisers and companies need added vigilance on:
- Compliance programs, policies and procedures
- Marketing, compensation and valuation
- Disclosures and regulatory filings
- Third-party/affiliated service providers and branch offices, along with policies and procedures for informed consent
RIAs to private funds, in particular,need to tighten oversight and compliance around such areas as:
- Portfolio management risks
- Contractual obligations for limited partnership advisory committees
- Calculation/allocation of private fund fees and expenses
- Conflicts, controls and disclosures about side-by-side managed private funds
- Compliance with various Advisers Act custody requirements
Key takeaways: After a year of high inflation, rising interest rates and continued market volatility, the Division views its 2024 priorities as “enhancing trust in our ever-evolving markets,” according to SEC Chair Gary Gensler. To that end, expect more intense scrutiny of advisers’ adherence to duty of care and duty of loyalty obligations, including investor disclosures and adviser incentives.
How can you get prepare for what’s ahead? Read the full report of the SEC’s 2024 Examination Priorities and talk to the experts at Richey May. To learn more, email svlasak@richeymay.com.
