June 28, 2022

Volume XII, Number 179

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June 28, 2022

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June 27, 2022

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SEC's Examination Priorities for 2022

On March 30, 2022, the SEC’s Division of Examinations (formerly the Office of Compliance Inspections and Examinations (OCIE)) issued its examination priorities for 2022.  In addition to broadly reiterating its continued focus on advisers’ fiduciary duties to their clients, the protection of retail investors and compliance with Regulation Best Interest and Form CRS; environmental, social and governance (ESG) matters; and information security and operational resiliency, the Division also identified examination priorities that will be of particular interest to managers of both private and registered funds, including emerging technologies and crypto-assets. 

Private Funds  

Private fund matters will continue to be a focus.  The Division will review issues under the Advisers Act and advisers’ practices, paying special attention to conflicts of interest, disclosures, practices, control and investor reporting in respect of portfolio strategies, risk management and investment recommendations and allocations. 

ESG  

The Division will focus on whether registered investment advisers accurately disclose ESG investing approaches, and on the adoption and implementation of policies and practices by registered investment advisers and funds to avoid violations of federal securities laws in connection with ESG-related disclosures.

Retail Investors and Working Families

In order to ensure that retail investors and working families receive recommendations and advice in their best interest from broker-dealers and registered investment advisers, the Division will prioritize examinations of practices regarding consideration of investment alternatives, management of conflicts of interest, trading, disclosures, account selection, and account conversions and rollovers.

Information Security and Operational Resiliency  

The prevention of interruptions to mission-critical services will continue to be a focus for the Division.  Examinations will focus on business continuity and disaster recovery plans and, generally, measures implemented to safeguard customer accounts and prevent account intrusions, oversee vendors and service providers, address malicious email activities, respond to incidents and manage operational risks. 

Emerging Technologies and Crypto-Assets

Regulatory compliance programs will be scrutinized to assess whether they address the unique risks of emerging financial technologies.  The Division will focus on firms that are (or are claiming to be) offering or using new products, services and practices, and whether their operations and controls are consistent with disclosures made and their regulatory obligations.  The Division will also continue to review offers, sales, recommendations, advice, trading and custody arrangements made by participants engaged with crypto-assets. 

The Division of Examinations’ 2022 examination priorities are available here.

© 2022 Vedder PriceNational Law Review, Volume XII, Number 102
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About this Author

 Robert M. Crea Investment Services Attorney Vedder Price San Francisco, CA
Shareholder

Robert M. Crea is a Shareholder at Vedder Price and a member of the firm’s Investment Services group in the San Francisco office.

Mr. Crea counsels investment advisers, private fund managers and broker-dealers on a variety of fund formation, product structuring, regulatory and compliance, performance presentation and securities law matters. He regularly works with clients to structure and document U.S. and offshore private investment funds and assists clients with a variety of state and federal regulatory and compliance issues. He represents pension plans and other institutional...

415-749-9504
Jeff VonDruska Investment Services Lawyer Vedder Price Law Firm
Shareholder

Jeff VonDruska is a Shareholder in the Chicago office of Vedder Price and a member of the firm’s Investment Services practice group.

His practice includes the representation of investment advisers, family offices, private funds, registered mutual funds, closed-end funds, exchange-traded funds and other financial institutions on a broad range of legal, regulatory, governance, formation and compliance matters.

Mr. VonDruska has significant experience in regulatory and compliance matters affecting investment advisers, including registration and marketing. He also counsels...

312-609 7563
Laure Sguario Associate New York Vedder Price
Associate

Laure Sguario is an Associate in Vedder Price’s New York office and a member of the firm’s Investment Services practice group.

Ms. Sguario concentrates her practice on representing private equity funds and hedge funds in fund formation, regulatory compliance, general corporate and governance matters. She has assisted with the launch of various private funds both domestically and in the European Union, and frequently advises private fund clients regarding regulatory and compliance issues under European and Luxembourgish securities and...

212-407-7746
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