Recently, the SEC’s Office of Compliance Inspections and Examinations (OCIE) released the 2020 Examination Priorities Program for examining those RIAs that have not previously been examined.
The OCIE plans to emphasize the protection of senior retail investors and those saving for retirement.
Examinations will focus on recommendations and advice given to retail investors, with a particular focus on: (1) seniors, including recommendations and advice made by entities and individuals targeting retirement communities; and (2) teachers and military personnel. Examinations will relatedly focus on registered firms’ disclosures and supervision of outside business activities of its employees and associated persons, and any conflicts that may arise from those activities.
FY 2019 Results
In 2019, OCIE completed 3,089 examinations. This is a decrease of 2.7% from FY 2018. The decrease stems from the month long government shutdown in 2019.
Examinations of registered investment advisers (RIAs) in FY 2019 remained strong at approximately 2,180, covering
15 percent of this population.
Examinations of investment companies increased this year to over 150, increasing by approximately 12 percent, driven primarily by the six initiatives OCIE announced in November 2018
OCIE completed over 350 examinations of brokerdealers, 110 examinations of national securities exchanges, and over 90 examinations of municipal advisors and transfer agents.
OCIE also completed over 160 examinations of the Financial Industry Regulatory Authority (FINRA), including examinations of critical FINRA program areas as well as oversight reviews of FINRA examinations. Finally, OCIE
completed 15 examinations of clearing agencies.
During FY 2019, OCIE issued more than 2,000 deficiency letters, with many firms taking direct corrective actions in response to those letters, including by amending compliance policies and procedures or a regulatory filing; enhancing their disclosures; or, returning fees back to investors, among other things.
OCIE also commits significant resources to verify the existence of investor assets at custodians and to ensure that they are valued properly, a process called asset verification. In FY 2019, OCIE verified over 3.1 million investor accounts, totaling over $1.5 trillion.