The SEC's 2026 Examination Priorities

Highlights

• In its Examination Priorities for Fiscal Year 2026, the U.S. Securities and Exchange Commission (SEC) signals a shift back to the foundational priorities of retail investor protection, market integrity, and consistent examination practices, while indicating they will move away from "regulation by enforcement" and novel legal theories.
• Examiners will intensify focus on cybersecurity and operational resiliency, including firms' readiness for amended Reg S-P requirements and controls addressing identity theft and advanced cyber threats.
• Investment advisers, investment companies, and broker-dealers should expect close review of fiduciary duties, compliance program effectiveness, fund fees and disclosures, order routing and execution quality, and risks associated with complex or illiquid products.
• The SEC will examine anti-money laundering (AML) program design, sanctions compliance, and the accuracy and oversight of AI, automated tools, and alternative data.

On November 17, 2025, the SEC's Division of Examinations published its Examination Priorities for Fiscal Year 2026 (2026 Exam Priorities), signaling where and how the Division intends to focus its organizational resources over the next fiscal year. As the first examination priorities released under new SEC Chairman Paul Atkins, these priorities provide important insights into the areas on which the Division expects to focus during exams of regulated entities, as well as a potential indicator of the SEC's enforcement priorities going forward.

In announcing the 2026 Exam Priorities, Chairman Atkins stressed the importance of examinations in accomplishing the SEC's mission but commented that they "should not be a 'gotcha' exercise," explaining that the priorities should enable firms to have a "constructive dialogue" with SEC examiners. The introductory message from the leadership team further emphasized the Division's commitment to implementing an "operational effectiveness framework," particularly in light of reduced staffing and resources, to ensure greater consistency across examinations.

Consistent with this approach, the 2026 priorities suggest a return to the SEC's foundational focus areas, such as retail investor protection and market integrity, and a shift away from regulation by enforcement and deficiency findings based upon novel legal theories. Other areas of focus include cybersecurity and supervision of "emerging financial technology," such as artificial intelligence (AI). Notably, the priorities do not reference cryptocurrency, which was a focus in prior years.

Below, we highlight certain key takeaways from the 2026 Exam Priorities that registrants should bear in mind when assessing their compliance functions, managing regulatory risks, and preparing for a prospective SEC examination during the 2026 fiscal year. Registered entities should consider reviewing their policies and procedures with particular attention to areas identified in the 2026 Examination Priorities, including emerging areas such as cybersecurity and the use of AI and other automated technologies. Registered entities should further consider making enhancements and preparations for SEC examination, as needed, to address these areas of regulatory focus and evolving best practices.

Investment Advisers

Consistent with years past, the Division will continue to prioritize:

1. investment advisers' adherence to fiduciary standards of conduct (i.e., duties of care and loyalty), particularly for aspects of their business serving retail investors;
2. the effectiveness of their compliance programs, including annual reviews and core controls for marketing, valuation, trading, portfolio management, disclosure and filings, and custody, and whether such programs sufficiently address conflicts of interest; and
3. examinations of advisers that have never been examined, with particular emphasis on recently registered advisers.

Unlike the Examination Priorities for Fiscal Year 2025, the 2026 priorities do not provide a standalone section for advisers to private funds. Also, the 2026 priorities reflect a heightened focus on alternative and complex investment products (e.g., ETFs with less liquid underlying strategies, option-based/leveraged/inverse ETFs, etc.), as well as certain kinds of advisers that the Division perceives as creating additional risks. These include advisers that are dually registered as broker-dealers, advisers utilizing third parties to access client accounts, and advisers that have recently merged or consolidated with, or been acquired by, existing advisory practices.

Investment Companies

As with previous years, the Division will continue to prioritize examinations of registered investment companies (RICs), including mutual funds and ETFs, with a particular focus on:

1. fund fees and expenses, and any associated waivers and reimbursements;
2. portfolio management practices and disclosures, for consistency with statements about investment strategies or approaches, with fund filings and marketing materials; and
3. examinations of RICs that have never been examined, with particular emphasis on recently registered RICs.

In the 2026 fiscal year, examinations will newly prioritize compliance with the amended fund "Names Rule" (after the applicable compliance date) and monitor certain developing areas of interest, such as operational and compliance challenges associated with RIC mergers, and valuation and conflicts of interest issues associated with RICs that employ complex strategies or have significant holdings of less liquid or illiquid investment holdings (e.g., closed end funds).

Broker-Dealers

Financial Responsibility Rules

The Division's examinations will continue prioritizing broker-dealer compliance with the net capital rule, the customer protection rule, and related internal controls. Reviews will largely maintain the same focus areas as those set forth in the 2025 Exam Priorities; however, the Division will newly prioritize evaluations of cash sweep programs and prime brokerage activities, including issues of concentration, liquidity, and counterparty credit risks.

Trading-Related Practices & Services

The Division will continue to focus on broker-dealer equity and fixed income trading practices, including practices related to municipal securities and extended hours trading. Unlike last year's priorities, the 2026 priorities no longer focus on offerings via fully-paid lending programs, mobile applications, and online trading platforms, nor do they emphasize examinations of practices associated with trading in pre-IPO companies and sales of private company shares in secondary markets. Instead, the Division will pay closer attention to order routing and execution, including best execution, pricing and valuation of illiquid instruments, and required disclosures of order routing and execution information per Rule 605 under Regulation NMS.

Although focus areas remain largely consistent with respect to Regulation SHO, the Division has expressed a new focus on examinations of alternative trading systems, including their compliance with the requirements mandated by Rule 301(b)(1) under Regulation ATS to have written safeguards to protect subscriber confidential information, alignment with their descriptions in the Form ATS-N, disclosures, and risk controls.

Retail Sales Practice, Including Compliance With Regulation Best Interest

The Division will continue examining broker-dealer sales practices related to Regulation Best Interest, including the following areas:

1. recommendations related to products and investment strategies (e.g., account and rollover recommendations);
2. conflict identification and mitigation practices;
3. processes for reviewing reasonably available alternatives; and
4. processes for satisfying the Care Obligation (e.g., consideration of particular factors in a customer's investment profile and the product and account type characteristics considered).

Most notably, the 2026 priorities shift focus away from crypto assets, unregistered products, and the use of automated tools (robo-advisors) to make recommendations. However, in the new fiscal year, broker-dealers should expect greater scrutiny of recommended products that are complex or tax advantaged (e.g., variable and registered index-linked annuities), ETFs that invest in illiquid assets (e.g., private equity or credit), municipal securities (e.g., 529 Plans), and private placements.

Clearing Agencies

Largely unchanged from 2025, the 2026 Exam Priorities reaffirm annual examinations of systemically important clearing agencies and risk‑based examinations of others, testing compliance with the Standards for Covered Clearing Agencies, and assessing risk management across liquidity, default management, collateral management, operations, and corrective action remediation. The 2026 priorities subtly refine the focus areas of examinations to include recovery and wind‑down planning and operational arrangements with other clearing agencies, but depart from the 2025 priorities' former emphasis on margin systems, linkages, and third‑party relationships.

Risk Areas Impacting Various Market Participants

Information Security & Operational Resiliency (Cybersecurity, Regulations S-ID & S-P)

Notably, cybersecurity remains a key focus for the Division. As part of its examinations in this area, the Division will review registrants' procedures and practices to assess whether they are reasonably managing information security and operational risks. Here, the 2026 Exam Priorities are similar to those of 2025 but include an additional focus on training and security controls employed to identify and mitigate new risks related to AI and polymorphic malware attacks.

The Division will examine compliance with Regulations S-ID and S-P. Regarding Regulation S-ID, the Division will focus on firms' development and implementation of a written Identity Theft Prevention Program designed to detect, prevent, and mitigate identity theft in connection with covered accounts. Ahead of the compliance dates for amendments to Regulation S-P, the Division will engage firms during examinations regarding their progress in preparing incident response programs aimed at detecting, responding to, and recovering from unauthorized access to or use of customer information. After the applicable compliance dates, the Division will assess whether firms have developed, implemented, and maintained policies and procedures per the amendments, which address administrative, technical, and physical safeguards to protect customer information.

Emerging Financial Technology

The Division's memo emphasizes heightened scrutiny of firms' adoption and use of automated investment tools, artificial intelligence, trading algorithms, and alternative data. Examiners will assess whether firms' representations about these technologies are fair and accurate and whether operational practices and controls align with disclosures made to investors.

Examiners will also consider whether algorithmic outputs lead to advice consistent with investors' profiles and stated strategies and whether firms have controls ensuring recommendations from automated tools meet regulatory obligations to retail and older investors. For AI specifically, the Division will evaluate the accuracy of firms' claims about AI capabilities and the adequacy of policies and procedures to monitor and supervise AI use across fraud prevention, back-office operations, AML, and trading functions. The Division will also consider how firms are integrating regulatory technology to automate internal processes and enhance efficiency.

Anti-Money Laundering

The 2026 Exam Priorities reinforce Bank Secrecy Act (BSA) obligations for broker dealers and certain RICs to maintain AML programs that are reasonably designed to prevent the financial institutions from being misused for money laundering or terrorist financing and to ensure compliance with BSA requirements. Examinations will review whether programs are appropriately tailored and regularly updated to reflect firms' business models and specific AML risks, including risks posed by omnibus accounts maintained for foreign financial institutions.

Examiners will assess the adequacy of independent testing, the robustness of customer identification programs (including verification of beneficial owners of legal entity customers), and whether firms meet Suspicious Activity Report filing obligations. For RICs, reviews will also address policies and procedures for oversight of applicable financial intermediaries. Finally, the Division will evaluate whether broker dealers, advisers, and RICs are monitoring and complying with economic sanctions administered by the U.S. Department of the Treasury's Office of Foreign Assets Control.

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.