On January 7, 2020, the Securities and Exchange Commission's ("SEC’s") Office of Compliance Inspections and Examinations (the “OCIE”) released its 2020 Examination Priorities Letter outlining exam priorities for broker-dealers, registered investment advisers, and other types of registrants.
In its letter, the OCIE identified the following areas related to broker-dealers that are similar to FINRA priorities:
- Senior investors
- Digital assets
- Reg BI
Other priorities noted by the OCIE pertaining to broker-dealers include the following:
- Retail Targeted Investments
OCIE will review products targeted products that may have additional risk for retail investors such as mutual funds, ETFs, fixed income securities, and microcap securities.
- Trading and Broker-Dealer Risk Management
The OCIE will focus on firms’ trading and risk management systems as they relate to areas such as odd-lot trading, algorithmic trading, and best execution.
- Municipal Advisors
OCIE will continue to focus on areas such as registration, professional qualifications, continuing education, and conflict-of-interest disclosures.
- Anti-Money Laundering (“AML”) Programs
OCIE will examine how broker-dealers implement their AML programs, including, but not limited to, customer identification programs, customer due diligence, beneficial ownership of legal entity customers, monitoring for suspicious activity, and the filing of suspicious activity reports (“SARs”).
- Clearing Agencies
OCIE will also focus on large and small clearing agencies for compliance with various Exchange Act rules and the Dodd-Frank Act.
As in previous years, the SEC have given the industry guidance on areas of concern for 2020. ACA reminds firms that these are not exhaustive lists of the areas regulators will review during examinations. As part of their planning for 2020, it is important for firms to identify the risk areas pertinent to their business lines and review these areas for compliance with the applicable rules and regulations. These priority lists provide at least a baseline for firms to confirm that their controls address these key regulatory areas.
For more information about the OCIE 2020 Examination Priorities, please contact your ACA consultant or Dee Stafford at (561) 628-5288 or firstname.lastname@example.org.