Alternative Investment

SEC Examination Priorities 2025: What’s in Focus?

Every year, the SEC’s Division of Examinations examines SEC-registered entities’ practices, products, and services to assess potential risks to investors and capital markets. As technology continues to transform investing, the Division of Examinations has continued to focus on the evolving marketplace and how to identify new and emerging risks. 

Here’s what fund managers should know about the SEC’s areas of focus for 2025 Examination Priorities:

Greater Focus on Emerging Technologies and Artificial Intelligence (AI):  

In 2025, there will be a significant shift towards examining how Artificial Intelligence technology is integrated into advisory operations, portfolio management, and compliance. As smart contracts evolve with this technology, addressing challenges like adaptability across different blockchain platforms and understanding the possible future implications of artificial intelligence in smart contracts will be necessary. Fund managers should ensure that their use of AI is transparent and compliant with existing regulations.  

Attention to Private Fund Fee Calculations and Allocations:  

In the continued effort to increase transparency, the accuracy of how private fund fees and expenses are calculated and allocated will have increased priority. Carefully reviewing calculations and allocations will help ensure transparency and fairness in fee structures. 

Shift in Focus for Private Fund Advisers:  

While monitoring private fund advisers, this year’s priorities emphasize compliance with recent amendments to Form PF. Fund managers, especially those managing large hedge and private equity funds, should familiarize themselves with these new reporting requirements to avoid potential pitfalls. 

The 2025 priorities also include several additional examination areas of emphasis: 

• Oversight of illiquid and hard-to-value assets. 

• Enhanced scrutiny of complex financial products. 

• Increased attention to commercial real estate exposure. 

• Strengthened vendor supervision requirements. 

• Review of affiliated service provider relationships. 

These updates underscore the SEC’s continued focus on identifying and addressing emerging risks and market developments. Fund managers should proactively evaluate their practices against these priorities, potentially working with compliance experts to ensure all bases are covered. 

How can you get ready for what’s on the horizon? Read the full report of the SEC’s 2025 Examination Priorities and talk to the alternative investment experts at Richey May. To learn more, email Steve Vlasak.