The SEC’s Division of Examinations has released its Fiscal Year 2027 Examination Priorities, the annual roadmap for where examiners will focus across more than 34,000 registrants. Familiar themes return, including fiduciary duty, conflicts of interest, and cybersecurity. This year’s report also sharpens its focus on private funds and private credit, adds attention to firms undergoing business changes, and adopts new language for emerging technology.
Below is a condensed look at the areas most relevant to private equity, venture capital, hedge fund, and digital asset fund managers, as well as managers of registered investment companies (RICs). For a refresher on last year’s priorities, see our 2026 summary.
Fiduciary Duty and Economic Conflicts of Interest
The Division continues to examine whether advisers meet their fiduciary obligations, particularly where practices affect retail and older investors. For fiscal year 2027, it will prioritize economic conflicts of interest, assessing whether financial incentives may affect the impartiality of advice in areas such as fee rebates, fee and expense calculations, cash management, and quid pro quo arrangements.
This emphasis builds on a June 2026 risk alert in which examiners observed economic conflicts that were undisclosed or incompletely disclosed, advisory fees charged inconsistently with client agreements and disclosures, and compliance programs that did not fully address these conflicts.
Examiners will also look at how advice is formulated. That includes whether factors such as liquidity, volatility, time horizon, and costs (including exit costs) are consistent with each client’s profile, objectives, and risk tolerance.
Private Funds and Private Credit Under the Microscope
Private funds receive more specific attention this year. When examining private fund advisers, the Division will review:
- Investment-related risk disclosures and their consistency with fiduciary standards
- Whether compliance policies and controls address both fund-level and investment-level risks
- Disclosures around allocations, use of debt and fund-level lines of credit, and affiliated service providers
- Accuracy of fee and expense calculations at both the fund and investment levels
Advisers recommending illiquid or hard-to-trade products are also a priority, including loans provided by private funds or business development companies (BDCs) and investments in private companies through special purpose vehicles. Broker-dealer exams will also review the pricing and valuation of illiquid instruments such as private credit and private equity.
Private Credit in Registered Funds
Private credit also shows up in the registered fund space. For registered investment companies, including mutual funds and ETFs, the Division will continue monitoring funds that hold less liquid or illiquid investments such as private credit, along with the related valuation, redemption, and conflict and risk disclosure issues. Funds with leverage vulnerabilities, such as BDCs, and funds operating under exemptive orders are also on the list. This is particularly relevant for managers running interval funds or other registered products alongside their private funds.
Third-Party Service Providers
New this year, the Division will look at advisers that use third parties to access client accounts, where controls may be insufficient to protect client assets and data. It will also examine advisers that rely on proxy advisory firms, including how they evaluate those recommendations and identify potential conflicts.
Compliance Programs and Firms in Transition
Compliance program effectiveness remains a core part of every exam. Reviews will cover marketing, valuation, trading, portfolio management, disclosures and filings, and custody, along with the adviser’s annual compliance review. Examiners will look at whether policies are actually implemented, not just written, especially around fee-related conflicts.
A notable addition is the focus on firms that have changed. The Division will prioritize advisers that have shifted business models, taken on new client types or asset classes, added services, grown through mergers or acquisitions, or operate from multiple dispersed offices. Examiners will assess whether compliance programs have kept pace with those changes.
Activist Advisers
Advisers with activist strategies should expect review of timely and accurate filings on Schedules 13D and 13G and Forms 13F, 13H, 3, 4, 5, and N-PX. Form 13H is newly listed this year.
Never-Examined and Recently Registered Advisers
As in prior years, advisers that have never been examined remain a priority, with emphasis on recently registered firms. This is especially relevant for emerging managers preparing for a first exam.
Super Intelligence, Cybersecurity, and Data Protection
The report now uses the term super intelligence (SI) for advanced technology. Examiners will review how firms prepare for SI-enabled threats such as generated phishing and deepfake voice or video, how they monitor SI used in operations, and whether technology representations match actual practices.
Cybersecurity reviews continue to cover governance, data loss prevention, access controls, ransomware response, and third-party technology risk. Under Regulations S-P and S-ID, examiners will assess incident response programs, customer notification procedures, service provider oversight, and identity theft programs updated for emerging risks.
A More Transparent Exam Process
The Division also released The SEC Exam Handbook, which replaces its prior exam brochure with a stage-by-stage roadmap of what to expect. Separately, an enhanced SEC and CFTC memorandum of understanding opens the door to coordinated or joint exams, which may matter for firms registered with both agencies.
What’s Next
The Division notes that these priorities are not an exhaustive list and that it expects firms to maintain risk-based compliance programs tailored to their businesses. The full FY 2027 priorities report and the Exam Handbook are the best places to dig into the details for your fund.
If you have questions about how these priorities may apply to your fund or management company, contact Steve Vlasak, Business Development Partner in Richey May’s Alternative Investments Practice.
Sources
- SEC Press Release 2026-109: SEC Announces Fiscal Year 2027 Examination Priorities
- SEC Division of Examinations: Fiscal Year 2027 Examination Priorities (PDF)
- SEC Risk Alert: Examinations Observations of Investment Adviser Obligations Related to Economic Conflicts of Interest (June 9, 2026)
- The SEC Exam Handbook: A Practical Guide on Process and Engagement (PDF)
