On Jan. 12, 2017, the Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) issued its annual Examinations Priorities for 2017 (Exam Priorities), which is available for download here.  As in past years, the Exam Priorities focus around three thematic areas, the first and the last of which are similar to the thematic areas highlighted in 2016 (which we summarized in the GT Alert titled “2016 SEC Exam Priorities”) while the second is an expansion of a past focus of OCIE – (1) matters of importance to retail investors, (2) risks specific to elderly and retiring investors and (3) market-wide risks. OCIE also highlights its objective of conducting data-driven and risk-based exam initiatives and the use of data analytics in “the vast majority” of exam initiatives.

The Exam Priorities note the evolving choices faced by retail investors, as well as the “ever widening array of information, advice, products and services” available to retail investors. Many of the Exam Priorities cited with respect to this theme – e.g., focusing on share class selection, multi-branch advisers, ETFs and wrap fee programs – represent a continuation or expansion of previously identified priorities and initiatives and past focus areas. OCIE also intends to expand its never-before-examined investment adviser initiative to cover not only select advisers that have been registered for a longer period but have not been examined but also focused, risk-based exams of newly-registered advisers, and for the first time highlights a focus on providers of electronic investment advice, including ‘robo-advisers.’

In focusing on elderly and retiring investors, in 2017 OCIE intends to continue its multi-year “ReTIRE” initiative (focused on retirement accounts serviced by SEC-registered advisers and broker-dealers) as well as its focus on the practices of public pension advisers (including pay-to-play compliance). In addition, OCIE intends to have a new focus on how asset management firms interact with senior investors and identify financial exploitation of seniors.

Related to market-wide risks, while cybersecurity and Regulation SCI will remain focus areas, the Exam Priorities highlight a number of newer initiatives. These initiatives include assessing the implementation and oversight of the newly-effective money market fund rules adopted in 2014, examining broker-dealers to assess compliance with their best execution duties and enhancing OCIE’s oversight of FINRA – focusing resources not just FINRA’s operations and regulatory programs, but also on assessing FINRA’s examination of individual broker-dealers.

In addition to these focus areas, the Exam Priorities identify municipal advisors, private fund advisers, and transfer agents as other types of capital markets participants to which OCIE’s examination resources are expected to be deployed.

The Financial Regulatory and Compliance and Investment Regulation Groups of Greenberg Traurig anticipate publishing a GT Alert providing additional detail on the Exam Priorities release in the near future.

Tags: brokers, capital markets, Exam Priorities, Greenberg Traurig, gtlaw, gt_law, OCIE, regulation sci, richard m. cutshall, robo-advisers, SEC
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Photo of Richard M. Cutshall Richard M. Cutshall

Richard M. Cutshall is Co-Chair of the firm’s Financial, Regulatory and Compliance Practice, Co-Chair of the firm’s Private Funds Group, and Co-Chair of the firm’s Investment Management Group. Rich has experience representing clients in a variety of investment management, general securities, and corporate

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Richard M. Cutshall is Co-Chair of the firm’s Financial, Regulatory and Compliance Practice, Co-Chair of the firm’s Private Funds Group, and Co-Chair of the firm’s Investment Management Group. Rich has experience representing clients in a variety of investment management, general securities, and corporate matters, including the representation of mutual funds, ETFs, and other funds registered under the Investment Company Act of 1940; fund and ETF independent directors; unregistered investment funds; federally registered, state registered, and federally and state exempt investment advisers; broker-dealers; and an array of public and private companies.

Rich represents investment adviser clients at all stages of their life cycle, from concept and formation through registration, daily operation through wind-down and exiting the business, including representing investment adviser clients on both the buy-side and sell-side in M&A transactions. He also represents clients in all aspects of investment company practice, including organizing and forming new funds and ETFs, registering mutual funds and ETFs with the SEC, and the acquisition and merger of public funds.

In the course of representing investment advisers and public and private funds, Rich advises Greenberg Traurig’s clients on all aspects of securities regulatory compliance, particularly including new and existing SEC rules; SEC examination, regulatory, and investigative initiatives and sweeps; the SEC’s proposal, adoption, and implementation of new regulations, such as the recently rewritten investment adviser marketing rule; and finding compliance solutions related to the regulatory scheme applicable to investment advisers and investment funds, including implementing both novel and long-standing SEC regulatory guidance and interpretations. He also advises clients on the day-to-day aspects of corporate governance, board and adviser fiduciary responsibility, and SEC compliance, as well as assisting clients in all aspects of SEC and other regulatory examinations.

Rich has given presentations on and assists a variety of investment management clients with their compliance with anti-money laundering laws, and has performed annual independent third party audits of several clients’ anti-money laundering policies, programs and controls.

Rich also has experience representing clients in many industries in the sale or acquisition of businesses, formation of corporate entities, sophisticated contract negotiations, and in obtaining, renewing and renegotiating the terms of financing business operations. He routinely works with clients’ chief executive officers, chief financial officers, directors, and in-house general and assistant general counsels, including occasionally working from clients’ corporate headquarters upon request. Rich works with corporate and finance clients of all sizes, from startup family-run businesses and entrepreneurial endeavors to Fortune 500 clients. He also has experience representing clients across many industries, including health care, data management, retail product display and advertising design and manufacturing, industrial manufacturing, and real estate management and brokerage industries.

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