SEC Announces 2022 Examination Priorities

Some areas of focus: private funds, ESG, info security, resiliency, crypto

The U.S. Securities and Exchange Commission (SEC) announced its examination priorities for 2022 on March 30, 2022. These fall into five categories: private funds; environmental, social, and governance (ESG) investing; retail investors and working families; information security and operational resiliency; and emerging technologies and crypto-assets. SEC Chair Gary Gensler stated: "The Division's 2022 examination priorities identify key risk areas that we expect registrants to address, manage, and mitigate with vigilance."

Richard R. Best, acting director of the SEC's Division of Examinations elaborated: "In this time of heightened market volatility, our priorities are tailored to focus on emerging issues, such as crypto-assets and expanding information security threats, as well as core issues that have been part of the SEC's mission for decades—such as protecting retail investors. Our priorities cover a broad landscape of potential risks to investors that firms should consider as they review and strengthen their compliance programs."

Key Takeaways

  • The SEC has announced its examination priorities for 2022.
  • These are key risk areas that registrants must "address, manage, and mitigate with vigilance."
  • Areas of particular SEC focus will be: private funds; ESG investing; protections for retail investors; information security; operational resiliency; emerging technologies; and crypto-assets.

Private Funds

The SEC's Division of Examinations will focus on registered investment advisers (RIAs) who manage private funds. Among the particular areas of concern will be: fiduciary duties, risks, risk management, risk disclosures, compliance programs, fees and expenses, custody, fund audits, valuation, conflicts of interest, portfolio strategies, investment recommendations, and asset allocations.

ESG Investing

Examinations will focus on whether RIAs and registered funds are accurately disclosing their ESG investing approaches and practices.

Retail Investors and Working Families

The Division of Examinations will continue to monitor whether broker-dealers and RIAs are giving retail investors and working families recommendations and advice that are in their best interests.

Information Security and Operational Resiliency

The Division will review practices to prevent interruptions to mission-critical services and to protect investor information, records, and assets.

Emerging Technologies and Crypto-Assets

The Division will examine how broker-dealers and RIAs are using emerging financial technologies, with an eye to determining whether unique risks arising from these activities were considered by these firms when designing their regulatory compliance programs. Examinations of market participants engaged with crypto-assets will continue to review the custody arrangements for these assets and will assess the offer, sale, recommendation, advice, and trading of crypto-assets.

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  1. U.S. Securities and Exchange Commission. "SEC Division of Examinations Announces 2022 Examination Priorities."

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