United States

2018 Priorities for SEC's OCIE


In its annual priority letter, the SEC Office of Compliance Inspections and Examinations (OCIE) restated its commitment to prioritize the interests of retail investors by examining those aspects of securities firms posing risks to investors and the capital markets. The annual publication is meant to notify the industry of emerging areas of concern, improve compliance, prevent fraud, monitor risk and inform the industry of policy.

OCIE will continue to focus examinations on FINRA’s operations and regulatory programs, including the quality of FINRA’s examinations of broker-dealers and municipal advisors as well as the effectiveness of select operations and internal policies, procedures and controls of the MSRB.

Examiners will continue to review compliance with applicable anti-money laundering requirements, including whether firms are appropriately adapting AML programs to address their regulatory obligations.

Regarding market infrastructure, OCIE will conduct examinations on those firms that provide services critical to the proper functioning of capital markets. This focus will include, among others, transfer agents, clearing agencies and national securities exchanges. The OCIE will concentrate on certain aspects of the firm’s operations and compliance with recently effective rules.

Protecting retail investors, including seniors and those saving for retirement, will continue to be a priority in 2018. OCIE will concentrate their examinations on the execution of customer orders in fixed income securities, the supervision of representatives selling products and services to investors, disclosure and calculation of fees, expenses and other charges investors pay. Included in the OCIE’s efforts to protect main street investors, it will continue to monitor the growth of cyrptocurrencies and initial coin offerings as well as examine registrants involved in the offer and sale to ensure that investors are receiving adequate disclosures about the risks associated with these types of investments.

Each of the OCIE’s examination programs will prioritize cybersecurity with an emphasis on, among other things, incident response, training, vendor management, data loss prevention, access rights and controls, governance and risk assessment.

Though these priorities are the focus of the OCIE, additional priorities may be added as emerging risk and trends are identified or in light of market conditions.