The US Securities and Exchange Commission has publicised the priorities of its Office of Compliance Inspections and Examinations for 2016.

The New Year's priorities concern a variety of financial institutions including investment advisors, investment companies and broker-dealers. Areas of examination include the protection of retail investors, including HNW individuals who invest for their retirement - a very common SEC theme. The OCIE will continue several of last year's initiatives to assess risks to retail investors who are looking for information, advice, products, and services to help them plan for and live in retirement. It will go on visits to review exchange-traded funds and ETF trading practices and variable annuity recommendations and disclosure.  

Market-wide risks are another priority. The OCIE will carry on focusing on cybersecurity controls at broker-dealers and investment advisors. New initiatives for 2016 include an evaluation of broker-dealers’ and investment advisors’ liquidity risk management practices and firms’ compliance with the SEC’s Regulation SCI, designed to strengthen the technological infrastructure of the US securities markets.

Data analytics are also in the spotlight. The OCIE’s growing ability to analyse large amounts of data will help the examiners to assess anti-money-laundering compliance, detect microcap fraud and search for excessive trading. The SEC also expects data analytics to be of service in visits to do with the promotion of new, complex and/or highly risky products.

The published priorities for 2016 are not exhaustive and may be adjusted to suit changing circumstances and new problems that emerge from risk assessments. The OCIE selected the priorities in consultation with other regulators.