The SEC Gives a Heads-Up: Investment Adviser Exam Priorities for 2013

private fund attorney NYCThe SEC posted its examination priorities for 2013 on its website on Thursday last week. They address market-wide overall themes, investment advisers (IAs)/investment companies, broker-dealers, clearing and transfer agents, and market oversight.

“We are publishing these priorities to promote compliance and communicate with investors and our registrants about areas that we perceive to have heightened risk,” Carlo di Florio, director of the SEC’s Office of Compliance Examinations and Inspections, said in a statement. “This document, as well as our Risk Alerts and other public statements, are windows through which we can increase transparency, strengthen compliance and inform the public and financial services industry about key risks that we are monitoring and examining.”

In this post, we will focus on investment advisers but the overall big-picture areas that the SEC emphasized in its 2013 priorities are worth mentioning.  If they sound familiar, it is because they have been highlighted by the SEC as key risks areas in the past.  They were grouped into fraud prevention and detection, governance/enterprise risk management, conflicts of interest, and technology.

The specific issues for IAs that we find noteworthy are:

  • Safety of assets.
  • Compensation arrangements and arising conflicts.
  • Marketing/performance.
  • Allocation of investment opportunities and arising conflicts.
  • Fund governance.

We will follow up with more detailed posts on these areas to highlight particular concerns.

A heads-up for new registrants and IAs that are also registered as broker/dealers: you are very much on radar, as well as payments made by advisers to distributors and intermediaries under revenue sharing, shareholder servicing, conference support or similar arrangements.

I would really be interested in learning which of these areas are of particular concern to your firm and which topics you would like to hear more about.  E-mail me at or send me a tweet at NewYorkBusinessLaws.

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