The U.S. Securities Exchange Commission (SEC) says that it plans to focus on brokers’ sales practices and fraud, among other things, in its compliance exams in the year ahead.
The SEC Friday published its examination priorities for 2013, which cover a wide range of issues, for the market as a whole and in specific segments of the industry. The market-wide priorities include fraud detection and prevention, corporate governance and enterprise risk management, conflicts of interest, and technology controls.
For brokers it plans to focus on sales practices, fraud and compliance with a new market access rule; for investment firms, exams will focus on newly-registered private fund advisers, and payments by advisers and funds to mutual fund distributors.
The SEC says that the list of priorities is not exhaustive, and may be adjusted throughout the year in light of ongoing risk assessment activities. The list was drawn up by senior exam staff and management, in consultation with the commissioners, and is based upon a variety of information including: tips, complaints and referrals from whistleblowers and investors; information reported by registrants in filings with the commission; information gathered through exams conducted by the SEC and other regulators; communications with other regulators; among other things.
“We are publishing these priorities to promote compliance and communicate with investors and our registrants about areas that we perceive to have heightened risk,” said Carlo di Florio, director of the SEC’s Office of Compliance Inspections and Examinations, which is responsible for the national examination program.
“Our examination program constantly seeks new ways to share our perspectives on key risks and regulatory issues so that registrants’ senior management, compliance and risk managers, among others, can take effective action,” di Florio adds.