Executive summary
The SEC Division of Examinations (the division) recently announced its 2026 Exam Priorities (PDF - 437 KB) for firms across the asset and wealth management industries. Investment advisors, investment companies, broker-dealers, self-regulatory organizations, clearing agencies and other market participants should expect continued focus on fiduciary duty, governance and disclosures, and the effectiveness of compliance programs. The priorities also indicate the division is increasing scrutiny around registrants’ evolving products and business models and technology-driven risks, including cybersecurity, AML and emerging financial technologies, underscoring the need for well-documented and tested controls.
Division provides key areas of focus for the upcoming year
The 2026 Examination Priorities released November 17, 2025 come with a clear message: the SEC is realigning its exam program with its fundamental mission — protecting investors, ensuring fair and orderly markets, and facilitating capital formation. Key cross-cutting themes in the 2026 agenda include intensified cybersecurity and operational resiliency reviews (with a spotlight on new Regulation S-P data protection rules and identity theft prevention under Regulation S-ID); scrutiny of firms’ use of emerging technologies, including artificial intelligence and algorithmic tools; and continued monitoring of anti-money laundering (AML) and sanctions compliance programs.
Firms should review these priorities carefully and adjust their compliance activities as needed to minimize regulatory risk.
Investment advisors
Investment advisers (IAs) remain a central focus of SEC examinations.
The Division’s priorities carry over key themes:
- Fiduciary duty and care: Examiners will scrutinize whether advisers are providing advice in clients’ best interest and are fully disclosing and mitigating conflicts of interest. The division will also look to validate that advisors are seeking best execution on behalf of their clients.
- Effectiveness of compliance programs: The division will assess marketing and advertising practices, valuation of client assets, trading and brokerage practices, portfolio management processes, regulatory filings and disclosures and custody of client assets. The staff will look at the annual compliance program review that advisers are required to conduct to see if it’s rigorous and results in improvements.
“The SEC’s priorities reaffirm that strong compliance programs win examinations,” said Kyle Daddio, Risk Advisory Parter and AML & Sanctions Practice Leader at Grant Thornton. “Firms should operationalize controls around fiduciary duty, marketing and custody, prove effectiveness through independent testing and timely remediation, and be exam‑ready on the amended Reg S‑P, identity‑theft prevention and AML.” - Never-examined and new registrants: As in previous years, the division will prioritize newly registered or never-before examined advisers.
“The SEC will continue to prioritize investment firms that have never been examined, with emphasis on new registrants. First-time exams can be intensive and can set the tone for future regulatory reviews,” said Charmone Adams, Risk Advisory Partner at Grant Thornton. “This should serve as a warning for investment managers, as being unprepared for an initial exam can lead to findings that are difficult to remediate. Mock exams could be valuable to appropriately prepare.”
Beyond these core themes, the SEC highlighted certain focus areas within the adviser space that reflect evolving products and business models:
- Alternative and complex investments: Examiners will focus on advisers’ recommendations of alternative investments and complex products, particularly in retail accounts. The priorities explicitly call out: (1) alternative investments such as private credit funds or private funds with long lock-up periods, (2) complex ETFs or other products with complicated strategies and (3) products with higher costs or fees than comparable alternatives.
- Investor type and profile considerations: The SEC will zoom in on recommendations made to vulnerable or high-stakes investors, such as older clients or those nearing retirement.
- Private fund advisers: Although the 2026 priorities do not include a standalone section on private fund advisers, the SEC has woven private fund concerns into the broader adviser focus. Examiners will look at areas such as advisers who run both private funds and separately managed accounts and/or newly registered funds.
- Dual registrants and emerging business models: The SEC is focusing on advisory firms that may pose additional conflicts due to their business structure. These include (1) dually registered adviser/broker-dealers, (2) advisers that use third-party fintech platforms to access client accounts and (3) advisers that have recently merged with or been acquired by other firms.
Overall, the investment adviser priorities in 2026 are consistent with 2025’s focus on fiduciary duty and compliance program fundamentals. The biggest differences are the removal of a distinct section devoted to private fund advisors and the omission of the mention of cryptocurrency or digital assets.
How we can help you
INDUSTRY
SERVICE
Investment companies
The division will continue to closely scrutinize registered investment companies, including mutual funds, ETFs and other fund types, given their importance to retail investors. Major focus points include:
- Compliance programs and governance: Examiners will expect robust policies covering the Investment Company Act and related rules and strong board oversight of fund operations. The fund’s disclosures, SEC filings (such as registration statements and shareholder reports) and marketing materials will be reviewed for accuracy and consistency.
“Credible compliance hinges on what you can show — governance minutes, risk assessments, control designs, testing results, breach notifications, and AML decisions documented and reviewed,” Daddio said. “In 2026, that evidence is the difference between findings and confidence.” - Fees and expenses: Fund fees, expenses, and any related waivers or reimbursements are a consistent exam topic. In 2026, the SEC will scrutinize fee structures and may look at fund adviser fee arrangements, sub-advisory fees and whether expense-cap waivers are honored.
- Portfolio management and consistency with disclosures: The division will look at portfolio holdings and trading to see if they match the fund’s advertised strategy and risk profile. In 2026, examiners are also keyed in on the newly amended “Names Rule.” SEC staff will prioritize checking funds’ compliance with the updated rule after the compliance deadlines.
- Never-before examined funds: Mirroring their approach with advisers, the SEC will focus on newly registered or never-examined investment companies. This includes new mutual fund complexes or ETF sponsors.
- Mergers and illiquid Assets: While prior exams have always looked at valuation and liquidity, but this year the priorities explicitly mention funds that participate in mergers or hold significant illiquid investments.
These focus areas represent a continuation of the priorities from 2025 and don’t indicate a significant shift in approach.
Broker-dealers
Broker-dealers are another pillar of the SEC’s examination program. The 2026 priorities for broker-dealers cover a range of regulatory obligations, roughly grouped into financial safety, trading practices, and sales practices. Here are the key areas of focus and what’s new:
- Broker-dealer financial responsibility rules: Examinations will focus on broker-dealer compliance, specifically with the Net Capital Rule and the Customer Protection Rule, as well as the internal processes, procedures and controls that relate to that compliance. The 2026 priorities add focus on “cash sweep” programs and prime brokerage operations. Examiners will review how firms handle customer cash balances and whether that introduces concentration, liquidity or counterparty credit risks. Similarly, in prime brokerage, they will check for controls around lending, collateral management and exposure to large clients.
- Broker-dealer trading practices: The division will focus on broker-dealer equity- and fixed-income trading practices, focusing specifically on: (1) extended-hours and municipal bond trading, (2) Regulation NMS Rule 605, which focuses on order routing and execution quality, (3) Regulation SHO, particularly the “bona fide market making” exception for the short sale close-out requirement and (4) Rule 301(b)(1) under Regulation ATS, which requires alternative trading systems (ATS) to have written safeguards to protect subscriber confidential information.
- Regulation Best Interest: The SEC will continue to prioritize broker-dealer sales compliance. Key areas of interest remain: (1) product recommendations, investment strategies and account types; (2) conflict of interest disclosures and conflict mitigation practices; (3) review process of reasonably available alternatives, and (4) factors considering individual investors’ investment profile, including investment goals and account characteristics.
Self-regulatory organizations
The SEC also oversees the regulators, namely the self-regulatory organizations (SROs) such as national securities exchanges like NYSE or NASDAQ, the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB). In 2026, the division will continue conducting oversight exams of these SROs to ensure they are fulfilling their own regulatory responsibilities.
The Division will assess whether national securities exchanges are effectively enforcing their members’ compliance with exchange rules and federal securities laws. This can include reviewing the exchanges’ surveillance programs, disciplinary actions and their participation in market-wide initiatives. One specific mention is participation in National Market System plans. The SEC wants to ensure exchanges aren’t just businesses but also regulators carrying out oversight of broker-dealer members and trading activity on their markets.
For FINRA, the division will focus on conducting its risk-based oversights of the regulatory authority, including inspections of FINRA’s major regulatory programs, to make detailed recommendations to improve FINRA’s programs, risk assessment processes and future examinations.
The division will also review how the MSRB is fulfilling its mandate to write and oversee rules for the municipal securities market.
Clearing agencies
The fifth entity that the division lists are clearing agencies, specifically registered clearing agencies. The SEC has a mandate under Dodd-Frank’s Title VIII to examine systemically important clearing agencies at least annually. For those that are registered but not deemed systemically important, the SEC will conduct targeted, risk-based exams. The 2026 clearing agency priorities are largely unchanged from 2025. The division will focus on clearing agencies’ core risks, processes, and controls and will cover specific areas such as the nature of clearing agencies’ operations and assessment of financial and operational risk.
Other market participants
The division will also focus on other market participants that do not neatly fit into other categories, including:
- Municipal advisors: The SEC will continue to examine municipal advisors for compliance with their fiduciary duty to municipal entity clients. Examiners will review situations such as pricing and method-of-sale recommendations to ensure the advice was in the client’s best interest. They will also check compliance with MSRB Rule G-42, which sets core standards for municipal advisors including disclosure of conflicts of interest and documentation of the advisory relationship.
- Transfer agents: The division will focus on transfer agent processing of transfers and issuances, recordkeeping and retention, the safeguarding of funds and securities in their possession, and timely filing of required reports with the SEC. Examiners will also evaluate compliance with the 2024 amendments to Regulation S-P, including the safeguards rule, the disposal rule and the requirement to establish incident response programs.
- Funding portals: The SEC will focus on funding portals’ arrangements with qualified third parties for handling investor funds. Under the rules, funding portals typically cannot directly hold investor money; they use banks as escrow agents. Examiners will check if these arrangements are in place and functioning as intended. Like transfer agents, after Reg S-P’s amendments compliance date, funding portals will be examined for compliance with the new privacy and security rules.
- Security-based swap dealers: The division will continue to focus on whether dealers are complying with the Regulation and Dissemination of Security-Based Swap Information. This will include examinations of whether dealers are complying with capital, margin and segregation requirements.
- Security-Based Swap Execution Facilities (SBSEFs): In 2026, the SEC will start examining registered SBSEFs, trading venues for security-based swaps. Examiners will focus on SBSEFs’ rulebooks and internal policies and procedures around trading, and will review how they monitor trading, process trades and allow participation.
Risk areas impacting various market participants
The division will also focus on risk areas impacting various market participants.
- Information security and operational resiliency: While cybersecurity has been a “perennial priority” in past years, the SEC is ramping it up further in 2026 in light of escalating threats. The division will review firms’ information security practices, business continuity plans and ability to withstand cyber incidents, including a new focus on advanced threats such as AI-driven attacks and polymorphic malware. Additionally, firms must implement new data privacy rules: the amended Regulation S-P requires written incident response programs and customer notification of data breaches. In 2026, exams will assess firms’ progress in implementing these requirements, including reviews conducted before the rules are fully effective and follow-up exams to verify compliance. Identity theft prevention (Regulation S-ID) is also a priority, and examiners will expect to see robust Identity Theft Prevention Programs (“red flags” rules) with staff training and active controls.
- Emerging financial technology: The SEC will also be reviewing how firms deploy new technologies in their businesses. Automated advice platforms, robo-advisors, AI-driven analytics, trading algorithms and the use of “alternative data” will face scrutiny. Examiners will test whether firms’ claims about their tech are accurate and whether their oversight and controls are effective.
“Examiners will focus on emerging financial technology and AI such as automated investment tools, AI-based systems and algorithmic models, including whether representations are accurate and whether technology-driven recommendations align with expectations,” Adams said. “In addition, tools should be access and reviewed frequency for completeness and accuracy of data.”
- Regulation Systems Compliance and Integrity (SCI): The division will continue to evaluate whether SCI entities have established, maintained and enforced written policies and procedures as required. Reviews will focus on the implementation of incident response policies and procedures, the management of third-party vendor risk and the identification of vendor systems that qualify as SCI or indirect SCI systems.
- AML: The SEC remains focused on AML programs and sanctions compliance across broker-dealers and applicable investment companies. The 2026 priorities reiterate the need for firms to tailor AML programs to their specific risks, keep them updated — particularly when offering omnibus accounts to foreign institutions — conduct independent tests and ensure thorough customer due diligence (e.g., verifying beneficial owners). Examiners will check whether firms are filing Suspicious Activity Reports (SARs) when required and are screening against OFAC sanctions lists in real-time.
“Effective AML programs are not just a regulatory requirement — they are a cornerstone of market integrity,” Daddio said. “In 2026, firms must demonstrate that their AML controls are risk-based, continuously updated and rigorously tested. Real-time sanctions screening, thorough customer due diligence and timely reporting of suspicious activity are essential to meeting the SEC’s heightened expectations.”
Summary
The SEC’s 2026 Examination Priorities outline reinforce core compliance fundamentals that emphasize protecting investors, while also accounting for new developments in technology and recent rule changes. They bring new regulatory refinements and subtle shifts in emphasis but largely reinforce expectations that have been building over recent years.
The division has signaled that it will continue to monitor industry developments and market events to assess the impact on retail investors and SEC-registered firms and will continue to tailor its risk-based program to respond accordingly. Firms should expect close scrutiny in 2026 and be prepared to support compliance with clear documentation and well-functioning controls.
Contacts:
Leader, Advisory Services, Asset Management
Partner, Risk Advisory Services
Grant Thornton Advisors LLC
Charmone is a Principal in the Risk Advisory Services practice. Charmone has a diverse background in public and private accounting which spans across multiple industries.
Manhattan, New York
Industries
- Asset Management
- Private Equity
- Banking
Service Experience
- Advisory Services
- Risk Advisory
Content disclaimer
This Grant Thornton Advisors LLC content provides information and comments on current issues and developments. It is not a comprehensive analysis of the subject matter covered. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this content.
Grant Thornton Advisors LLC and its subsidiary entities are not licensed CPA firms.
For additional information on topics covered in this content, contact a Grant Thornton Advisors LLC professional.
Trending topics
No Results Found. Please search again using different keywords and/or filters.
Share with your network
Share