SEC outlines examination priorities for fiscal year 2024 

The SEC will intensify its scrutiny of investment advisers, focusing on compliance with fiduciary duties, disclosure practices, and conflicts of interest. Particular attention will be given to private fund advisers and newly registered advisers to ensure adherence to regulatory standards. 

The examination of investment companies will concentrate on their compliance with existing regulations, governance practices, and the accuracy of disclosures provided to investors. This priority aims to safeguard the interests of investors by ensuring transparency and accountability within investment companies. 

Broker-dealers will be under increased surveillance, particularly regarding their compliance with Regulation Best Interest, Form CRS, financial responsibility rules, and trading practices. The SEC seeks to ensure that broker-dealers operate with integrity and in the best interest of their clients. 

The SEC will examine national securities exchanges, the Financial Industry Regulatory Authority (FINRA), and the Municipal Securities Rulemaking Board (MSRB). These organizations play a critical role in maintaining market integrity, and the SEC’s oversight will focus on their regulatory compliance and operational practices. 

Clearing agencies will be evaluated on their risk management protocols, model validation processes, and internal audit functions. The goal is to ensure these agencies can manage and mitigate risks effectively, thereby contributing to the overall stability of the financial system. 

The SEC’s examinations will also cover municipal advisors, security-based swap dealers, and transfer agents. These entities are essential to the financial markets, and the SEC’s oversight will ensure they adhere to regulatory requirements.

The SEC also has a number of key priorities to address emerging risks and technologies. Below are some of the key priorities for the upcoming year. 

• Information Security and Operational Resiliency: Given the increasing threats to cybersecurity, the SEC will ensure that market participants have robust information security practices in place to protect sensitive data and maintain operational resilience. 
• Crypto Assets and Emerging Financial Technology: The rise of digital assets and financial technology has introduced new compliance and risk management challenges. The SEC will focus on these areas to ensure that market participants manage these risks effectively and comply with regulatory requirements. 
• Regulation Systems Compliance and Integrity (SCI): Compliance with SCI regulations is crucial for the stability of the financial markets. The SEC will ensure that market participants adhere to these regulations to maintain the integrity of their systems. 
• Anti-Money Laundering (AML): The SEC will review AML practices across various market participants to ensure they are robust and effective in preventing illicit financial activities. 

In 2024, the SEC plans to increase its in-person fieldwork and host more compliance outreach events. These efforts aim to foster a better understanding of regulatory requirements and promote higher compliance standards across the industry.