Five Examination Priorities of The SEC Office of Compliance Inspections and Examinations

EDT
Securities and Exchange Commission

On February 7, 2018, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) announced its annual examination priorities for 2018. The OCIE desires to ensure compliance by preventing fraud and managing risk. These 2018 policies will focus specifically on critical market infrastructure, retail investors, developments in cryptocurrency, initial coin offerings, and secondary market trading.

SEC Chairman Jay Clayton applauded these examination policies, highlighting the OCIE’s efficient use of resources to improve market infrastructure and investor activity.

OCIE Director Pete Driscoll also commented, stating that the OCIE effectively adapted to a constantly changing market by prioritizing risk mitigation for investors and capital markets.

There are five main 2018 examination priorities:

Compliance and Risks in Critical Market Infrastructure

The OCIE will more closely scrutinize firms, ensuring their compliance with new rules and regulations. These firms include, but are not limited to, clearing agencies, national securities exchanges, and transfer agents.

Retail Investors, Including Seniors and Those Saving for Retirement

Like last year, the OCIE prioritizes protecting main street investors coming into 2018. It will monitor cryptocurrencies and initial coin offerings to ensure that investors are aware of the risks and costs associated with their investments. The OCIE will further supervise representatives who sell their services and products to investors.

FINRA and MSRB

The OCIE will closely examine FINRA and MSRB to ensure the quality of their policies and procedures.

Cybersecurity

The OCIE will place greater emphasis on cybersecurity, focusing on access rights and controls, vendor management, governance and risk assessment, training, data loss prevention, and incident response.

Anti-Money Laundering Programs

The OCIE will help firms comply with their corresponding anti-money laundering requirements, ensuring that they adequately address the regulatory obligations of AML programs.

This article highlights some but not all of the OCIE’s main examination priorities for 2018. More priorities may be added as market trends change and potential risks emerge. For a more detailed description of these priorities, visit the SEC’s website here.

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