Priorities Focus on Protecting Retail Investors, Assessing Market-Wide Risks and Using Data Analytics
On January 13, the Securities and Exchange Commission announced its Office of Compliance Inspections and Examinations’ (OCIE) priorities for 2015 which focus on three areas: protecting retail investors, especially those saving for or in retirement; assessing market-wide risks; and using data analytics to identify signs of potential illegal activity.
The 2015 examination priorities address issues across a variety of financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, clearing agencies, and national securities exchanges. Of particular interest are the following areas of examination:
Retail Investors – Retail investors are being offered products and services that were formerly characterized as alternative or institutional, including private funds, illiquid investments, and structured products. Additionally, financial services firms are offering a broad array of information, advice, products, and services to help retail investors plan for and live in retirement.
Market-Wide Risks – OCIE will examine for structural risks and trends that involve multiple firms or entire industries, including: monitoring large broker-dealers and asset managers in coordination with the SEC’s policy divisions, conducting annual examinations of clearing agencies as required by the Dodd-Frank Act, assessing cybersecurity controls across a range of industry participants, and examining broker-dealers’ compliance with best execution duties in routing equity order flow.
Data Analytics – OCIE will use its enhanced analytic capabilities to focus on registrants and registered representatives that appear to be potentially engaged in illegal activity. Press Release. Full Report.