SEC officials will focus their exams in 2015 on retail investors, market-wide risks and data analytics to uncover illegal activity, according to the Office of Compliance Inspection and Examinations (OCIE).
The priorities for exams this year will be “protecting retail investors, especially those saving for or in retirement; assessing market-wide risks; and using data analytics to identify signs of potential legal activity,” according to an SEC statement.
“We share our annual examination priorities to promote compliance,” says Andrew J. Bowden, OCIE’s Director, in a statement. “We have observed that when we share our areas of focus, many industry participants independently review their controls in the areas we have identified.”
To protect retail investors, the regulator will look closely at “products and services that were formerly characterized as alternative,” such as private funds and illiquid investments. The SEC will also be keeping an eye on informational materials distributed to those saving for or are in retirement.
On the market risk front, the OCIE “will examine for structural risks and trends that involve multiple firms or entire industries, including: monitoring large broker-dealers and asset managers … conducting annual examinations of clearing agencies … assessing cybersecurity controls… and examining broker-dealer’s compliance with best execution duties in routing equity order flow,” the statement says.
Finally, the SEC will also ramp up the data analytics capacity it’s been quietly building up for years, officials say. “OCIE will use these capabilities to focus on registrants and registered representatives that appear to be potentially engaged in illegal activity,” the statement says.
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