The SEC released its Office of Compliance Inspections and Examinations' (OCIE) 2016 examination priorities, which include such new areas as liquidity controls, public pension advisers, product promotion, as well as ETFs and variable annuities. The priorities also reflect an ongoing focus on protecting investors in risk areas such as cybersecurity, microcap fraud, fee selection and reverse churning. The priorities address issues across several financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, clearing agencies and national securities exchanges.

Areas of examination include:

  • Protecting Retail Investors - OCIE will continue several 2015 initiatives to assess risks to retail investors seeking information, advice, products and services to help them plan for and live in retirement. It also will undertake examinations to review ETFs and ETF trading practices, variable annuity recommendations and disclosure, and potential conflicts and risks involving advisers to public pension funds;
  • Market-Wide Risks - OCIE will continue its focus on cybersecurity controls at broker-dealers and investment advisers. New initiatives for 2016 include an evaluation of broker-dealers' and investment advisers' liquidity risk management practices, as well as compliance with the SEC's Regulation SCI, designed to strengthen technology infrastructure in securities markets; and
  • Data Analytics - OCIE's enhanced ability to analyze large amounts of data will assist examiners' ongoing initiatives to assess anti-money laundering compliance, detect microcap fraud and review for excessive trading. Data analytics also will help examinations that are focused on the promotion of new, complex and high-risk products.

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