2023 SEC Division of Examinations Priorities

14 February 2023
View Debevoise In Depth

As in prior years, the 2023 SEC Division of Examination (“EXAMS”) Priorities (the “2023 Priorities) promise assessments of registrants in a broad array of areas. Registrants should brace for thorough examinations and expect close attention centered on the following areas:

  • Given the explosive growth in private funds gross assets, EXAMS will continue to focus on registered investment advisers (“RIAs”) to private funds. EXAMS will focus on conflicts of interest, calculation and allocation of fees and expenses, and compliance with the recently adopted Marketing Rule.
  • In light of ongoing distress in crypto markets and continued innovation in financial technologies, EXAMS will focus on crypto offerings and technologies used to engage with retail investors, including social media posts and apps, as well as other products tied to the gamification of investing.
  • In the midst of an ongoing sweep by the Division of Enforcement relating to off-channel communications, registrants should expect close attention paid to their policies and procedures for preserving electronic business communications.
  • EXAMS will assess compliance with the recently adopted Advisers Act Marketing Rule and the Investment Company Act Derivatives and Fair Valuation Rules.
  • Due to the current enhanced international sanctions environment, EXAMS will heighten its focus on compliance with the Bank Secrecy Act and assess broker-dealer and registered investment company AML policies and procedures.
  • EXAMS will continue to scrutinize ESG claims and cybersecurity operational risk disclosures, practices, and policies and procedures.

Many of the 2023 Priorities match up with recent areas in which the Division of Enforcement has been active, posing a heightened risk of referrals.