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On February 7, 2023, the staff of the SEC’s Division of Examinations issued its examination priorities for 2023. The examination priorities included a number of areas of particular interest to regulated entities including registered investment advisers, broker-dealers and registered funds, including those described below.

• Notable New and Significant Focus Areas.

  • Adviser Marketing Rule (Rule 206(4)-1). The staff will assess whether advisers have adopted and implemented written policies and procedures reasonably designed to prevent violations of the rule, whose compliance date was November 4, 2022, and whether they have complied with the substantive requirements of the rule.
  • Fund Derivatives Rule (Rule 18f-4). The staff will assess whether registered funds have adopted and implemented compliance policies and procedures reasonably designed to prevent violations of the derivatives rule, whether funds have adopted and implemented a derivatives risk management program, the effectiveness of the derivatives risk management program, board oversight of derivatives and the accuracy and completeness of derivatives related disclosure.
  • Fund Valuation Rule (Rule 2a-5). The staff will assess board oversight of valuation matters at registered funds; the designation of the valuation designee; and any changes to valuation methodologies, compliance policies and procedures, governance practices, vendor oversight and reporting and recordkeeping made in response to the new rule.
  • Advisers to Private Funds. The staff will focus on conflicts of interest, the calculation and allocation of fees and expenses, marketing rule compliance, the use of alternative data and insider trading policies and procedures, and compliance with the Custody Rule (Rule 206(4)-2). The staff will also focus on advisers to private funds with specific risk characteristics.
  • Regulation Best Interest and Adviser Fiduciary Duties. The staff will continue to prioritize examinations of broker-dealers for compliance with Regulation Best Interest and examinations of advisers for compliance with applicable fiduciary duties. Among other issues, examiners will review the sufficiency of conflict of interest disclosure and whether firms have client agreements that inappropriately waive or limit a firm’s standard of conduct. The staff will also continue to prioritize compliance with Form CRS requirements.
  • ESG Investing. The staff will continue focusing on ESG disclosures and practices, including in particular at advisers and funds that hold themselves out as having ESG or sustainable strategies.

Information Security and Operational Resiliency. The staff noted the elevated risk environment given market events, geopolitical concerns and a proliferation of cybersecurity attacks. Given these risks, the staff will continue to focus on cybersecurity and the safeguarding of customer records and information at all regulated entities, with an added focus on issues associated with the use of third-party vendors.

Crypto Assets and Emerging Financial Technology. The staff will focus on broker-dealers and advisers offering products related to crypto assets and those providing services involving emerging financial technologies such as mobile app and automated investment tools, andtrading platforms, including “robo advisers.”

Registered Investment Advisers. In addition to focus areas from previous years (e.g., custody, valuation, portfolio management, brokerage and execution, conflicts and fee-related issues), the staff will review policies and procedures for retaining and monitoring electronic communications and selecting and using third-party service providers.

Registered Investment Companies. In addition to assessing compliance programs and governance practices, disclosures and the accuracy of reporting, the staff will focus on whether advisers to registered funds are fulfilling their fiduciary duties, including with respect to the receipt of compensation for services and other material payments made by funds. In this regard, the staff will evaluate fund boards’ processes for assessing and approving advisory and other fund fees, in particular for funds with weaker relative performance versus peers.

The staff will also focus on registered funds with specific characteristics, such as funds on turnkey platforms; mutual funds converted to ETFs; non-transparent ETFs (to assess compliance with applicable exemptive relief); funds that invest in loans, including leveraged loans and collateralized loan obligations; small complexes that have experienced significant personnel attrition; volatilitylinked or single-stock ETFs; and funds that have not previously been examined.

Broker-Dealers. In addition to compliance and supervisory programs, the safeguarding of client assets, trading practices and related conflicts of interest and issues specific to municipal and other fixed-income securities and OTC and microcap securities, the staff will focus on any involvement by broker-dealers in the distribution of unregistered securities.

National Securities Exchanges, Security-Based Swap Dealers, Municipal Advisors and Transfer Agents. The staff noted continued areas of focus in general, and cited added focus on transfer agents that service certain types of issuers and assets (including microcap and crypto assets) and those that use emerging technologies to perform their transfer agency services.

Anti-Money Laundering. The staff noted that examinations of AML programs and monitoring of and compliance with OFAC and Treasury-related sanctions by broker-dealers and registered funds have heightened importance as a result of the geopolitical environment and the increased imposition of international sanctions.

London Interbank Offered Rate Transition. The staff stated that it would continue its assessment of broker dealers’ and advisers’ preparation for the transition away from LIBOR, currently scheduled for mid-2023.

In closing, the staff stated that while it would allocate significant resources to its stated examination priorities, it would also conduct examinations and devote resources to address new or emerging risks, products and services, market events and investor concerns.

The Division of Examinations’ 2023 examination priorities are available here.


John S. Marten


Nathaniel Segal


Jacob C. Tiedt


Heidemarie Gregoriev