SEC Exam Priorities: Key Topics For Asset Managers

The SEC's Division of Examinations ("EXAMS") has released its annual examination priorities for fiscal year 2026 (the "2026 Examination Priorities").¹

These are the first set of examination priorities issued under SEC Chairman Paul Atkins, who has advocated for a renewed focus on facilitating efficient growth and innovation in U.S. capital markets without deviating from the SEC's core mission to protect investors. While acknowledging the importance of examinations, Chairman Atkins made clear his view that they should not be a "gotcha exercise." The leadership message introducing the 2026 Examination Priorities indicates that this year's priorities reflect a reassessment of EXAMS under Chairman Atkins, as well as developments in U.S. capital markets and broader economic and geopolitical forces, but many of the priorities remain aligned with prior years.

Key Takeaways:

• While examinations will continue to prioritize perennial items such as fiduciary duties, disclosure practices and effectiveness of compliance programs in core areas, they also will focus on developing areas of interest to the staff including mergers and consolidations of advisers and funds, alternative investments and complex or novel investment products.
• Crypto has been removed from the priorities, but technology continues to be a focus in other areas including the use of artificial intelligence, as well as cybersecurity, data privacy and identity theft programs. The 2026 Examination Priorities are consistent with an approach that does not regulate technology itself but rather how it is used, disclosures about its use and related risks and controls integrated into policies and procedures reasonably designed to prevent violations of existing laws and rules.
• Firms that have never been examined or that have not been examined recently remain a focus of EXAMS, as well as firms that have changed their business models or engaged with new types of assets, clients or services.
• In a change from prior years, the 2026 Examination Priorities do not include a section dedicated to examination priorities for advisers to private funds. Private fund issues, however, are woven into other priorities. While not the only priority, there is a strong emphasis in the 2026 Examination Priorities on protecting retail investors.
• Advisers that have "activist engagement practices" can expect greater scrutiny around timeliness and accuracy of filings required under Section 13 of the Securities Exchange Act of 1934, and proxy voting records filed on Form N-PX.

A more detailed summary of the 2026 Examination Priorities for asset managers is included below.² Although the 2026 Examination Priorities reflect areas that the staff may be expected to focus on during examinations, firms should be mindful that the priorities are not the only areas that may be addressed in examinations. EXAMS may cover other areas and conduct examinations focused on new or emerging risks, products and services, market events or investor concerns.

Investment Advisers

• Examining investment advisers' adherence to fiduciary standards will remain a priority EXAMS. EXAMS will review investment advice and disclosures for consistency with fiduciary duties, including matters such as: (1) the impact of financial conflicts of interest on providing impartial advice; (2) advisers' consideration of various factors in connection with providing investment recommendations, including investment cost, objectives, unusual characteristics, liquidity, expected performance in various market conditions, time horizon and cost of exit, among other factors; and (3) seeking best execution.
• Advisers can expect examinations to focus on alternative investment products, such as private credit funds and private funds with extended lock-ups, complex investments such as less liquid strategies in ETF wrappers, option-based ETFs and leveraged or inverse ETFs and higher cost products. EXAMS will also focus on investment recommendations for consistency with both product disclosure and client objectives, risk tolerance and financial and personal circumstances, with particular emphasis on the following areas: (1) recommendations to older investors and investors saving for retirement; (2) advisers that manage private funds "side by side" with separate accounts or newly registered funds, including whether investment allocations and interfund transfers favor certain clients; (3) recommendations involving products that are sensitive to market volatility; and (4) advisers to newly launched private funds or that are new to managing private funds.
• EXAMS will also focus on advisers that engage in practices that EXAMS deems to present heightened risk or conflicts, including: (1) advisers that are dually registered as broker-dealers or that employ dually-licensed personnel; (2) advisers that use third parties to access client accounts, which may include examination of the controls to protect client assets and data; and (3) firms that have merged or consolidated and related complexities or conflicts of interests.
• EXAMS will continue to focus on the effectiveness of adviser compliance programs in core areas such as marketing, valuation, trading, portfolio management, disclosure and filings and custody. Areas of particular interest include implementation and enforcement of policies and procedures and whether disclosures address conflicts of interests relating to account or product fee structures. EXAMS also noted that specific focus points will vary among advisers. For example, with respect to advisers that have "activist engagement practices," the staff may focus on the timeliness and accuracy of filings required under Section 13 of the Securities Exchange Act of 1934, including Schedule 13D/G, Form 13F and Forms 3, 4 and 5 and proxy voting records filed on Form N-PX.

Investment Companies

• EXAMS will continue to prioritize examinations of registered investment companies ("RICs") including mutual funds and ETFs. Examinations of RICs can be expected to involve their compliance programs, disclosures, filings and governance practices. Examinations of RIC operations will include a focus on: (1) fund fees and expenses, including associated waivers and expense reimbursements; and (2) portfolio management practices and disclosures, for consistency with statements concerning strategies, public filings and marketing materials and the amended names rule.
• EXAMS will monitor developing areas of interest, including: (1) RICs that participate in mergers and associated operational and compliance challenges; (2) RICs that use complex strategies or that have significant exposure to less liquid or illiquid investments (e.g., closed-end funds) and associated issues relating to valuation and conflicts of interest; and (3) RICs with novel strategies or investments, including funds with "leverage vulnerabilities."

Information Security and Operational Resiliency

• EXAMS will continue to review cybersecurity and other practices to maintain mission-critical services and protect investor assets, information and records. Policies and procedures concerning governance practices, data loss prevention, access controls, account management and responding to and recovering from cyber incidents will be an area of particular focus. New for 2026, examinations will additionally focus on the training and controls firms are implementing to identify and mitigate attacks using artificial intelligence and polymorphic malware. EXAMS will also focus on firms' identity theft prevention programs, including whether the programs are reasonably designed to identify and detect red flags and firm training on identify theft prevention. In preparation for the compliance dates for the amendments to Regulation S-P, EXAMS will engage firms on their progress in preparing incident response programs. After the compliance date, EXAMS will review whether registrants have implemented policies and procedures in accordance with the new provisions of the rule that address administrative, technical and physical safeguards for the protection of customer information.

Emerging Technologies

• EXAMS will continue to focus on emerging financial technologies, such as automated investment tools, artificial intelligence technologies, trading algorithms and platforms and associated risks. With respect to artificial intelligence, EXAMS will focus on recent advancements in AI technology and will review registrants' representations regarding their AI capabilities. EXAMS will also assess whether firms have implemented adequate policies and procedures to monitor and/or supervise their use of AI technologies, including for tasks related to fraud prevention and detection, back-office operations, anti-money laundering ("AML") and trading functions. The focus areas in the 2026 Examination Priorities are consistent with an approach toward AI that does not regulate the technology itself but rather how it is used, disclosures about its use and related risks and controls integrated into policies and procedures reasonably designed to comply with existing laws and rules.

Anti-Money Laundering

• EXAMS will continue to focus on AML programs and whether firms are monitoring and complying with sanctions imposed by the Department of Treasury's Office of Foreign Assets Control.

Footnotes

1. 2026 Examination Priorities, SEC Division of Examinations (Nov. 17, 2025). All statements in this NewsFlash as to the intent or plans of EXAMS are based on the text of the 2026 Examination Priorities. At times, this NewsFlash tracks the 2026 Examination Priorities without the use of quotation marks.

2. In addition to the priorities summarized in this NewsFlash, the 2026 Examination Priorities also cover broker-dealers, self-regulatory organizations, clearing agencies, municipal advisors, transfer agents, funding portals, security-based swap dealers and execution facilities and entities subject to Regulation Systems Compliance and Integrity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.