Help with Ongoing RIA Compliance Requirements

Help with ongoing RIA compliance requirements. The Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission (SEC) has now published its examination priorities for 2020.  The themes for 2020 are similar to 2019 and are included here and below is the detail: 

  1. Retail Investors, Including Seniors and Those Saving for Retirement
  2. Market Infrastructure
  3. Information Security
  4. Focus Areas relating to Investment Advisors/Investment Companies/Broker-Dealers and Municipal Advisors
  5. Anti-Money Laundering
  6. Financial Technology (FinTech) and Innovation, including Digital Assets and Electronic Investment Advice
  7. FINRA and MSRB

Retail Investors, Including Seniors and Those Saving for Retirement -OCIE will focus examinations on the disclosure and calculation of fees, expenses, and other charges investors pay, and conflicts of interest.  They will assess whether registered investment advisors (RIAs) provide advice in the best interests of their clients and eliminate or at least expose through full and fair disclosure, all conflicts of interest which might include an RIA to render advice that is not disinterested.  After the June 30, 2020 compliance date for Regulation Best Interest and Form CRS, OCIE intends to assess implementation of the requirements of the new rule, including policies and procedures regarding conflicts disclosure and the content and delivery of Form CRS.

Market Infrastructure – OCIE will continue to examine entities that provide services critical to the proper functioning of capital markets. They will conduct examinations of firms which include, among others, clearing agencies, national securities exchanges, alternative trading systems and transfer agents, focusing on certain aspects of their operations and compliance with recently effective rules. 

Information Security– OCIE’s examination programs will prioritize cybersecurity and other information security risks with an emphasis on, among other things, proper configuration of network storage devices, information security governance, and policies and procedures related to retail trading information security.  OCIE will continue to focus and assess RIA’s protection of clients’ personal financial information.

Focus Areas Relating to Investment Advisors, Investment Companies, Broker-Dealers and Municipal Advisors – OCIE’s examination of RIAs will focus on never been examined advisors, including new RIAs and RIAs registered for several years and have yet to be examined.  Their exams will include RIAs advising retail investors as well as private funds.  Review of compliance programs of RIAs, including whether those programs and their policies and procedures are reasonably designed, implemented and maintained. OCIE has a particular interest in the accuracy and adequacy of disclosures provided by RIAs offering clients new types or emerging investment strategies, such as strategies focused on sustainable and responsible investing, which incorporate environmental, social and governance (ESG) criteria.  For additional information concerning investment companies, broker-dealers and municipal advisors, see the link provided above for the examination priorities for 2020.

Anti-Money Laundering Programs – Examiners will review for broker-dealer compliance with applicable anti-money laundering requirements, including whether firms are appropriately adapting their AML programs to address their regulatory obligations.

Financial Technology (FinTech) and Innovation, including Digital Assets and Electronic Investment Advice – OCIE will continue to examine SEC registered firms engaged in the digital asset space as well as RIAs that provide services to clients through automated investment tools and platforms, referred to as “robo-advisors.”

FINRA and MSRB – OCIE will continue its oversight of FINRA by focusing examinations on FINRA’s operations and regulatory programs and the quality of FINRA’s examinations of broker-dealers and municipal advisors. For all of the important details around these categories and more, click here for a complete copy of the 2020 National Exam Priorities. Contact us today if you need help with ongoing RIA compliance requirements.

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