SEC, FINRA release 2016 exam priorities for asset managers

SEC FINRA 2016 examsBoth the SEC and FINRA recently released their priorities for 2016 examinations and continue to ramp up their oversight efforts with the goal of protecting investors. It is important that asset management firms review and update their policies, procedures and business activities to reflect both sets of priorities so they can strengthen business practices and prepare for potential exams.

SEC PRIORITIES In its Examination Priorities for 2016, the SEC’s Office of Compliance Inspections and Examinations (OCIE) states that the “priorities reflect certain practices and products that OCIE perceives to present potentially heightened risk to investors and/or the integrity of the U.S. capital markets.”1  The OCIE release provides guidance to investment advisers, broker-dealers, municipal advisers and transfer agents. It is designed to protect investors, assess market-wide risks and collect information on illegal activities via data analytics to identify signs of potential unlawful actions.

Chart 1 Proteching investors
Chart 2 Market-wide risks
Chart 3 Data analytics
Chart 4 other exam initiatives
FINRA PRIORITIES FINRA also recently issued its 2016 Regulatory and Examination Priorities Letter.2  Similar to the OCIE’s priorities, key FINRA examination areas include culture, conflicts of interest and ethics; supervisions, risk management and controls; liquidity; sales practices; financial and operations controls; and market integrity.

Chart 5 Culture, conflicts of interest and ethics
Chart 6 Supervisions, risk management, and controls
Chart 7 Liquidity
Chart 8 Sales practices
Chart 9 Financial and operations controls
Chart 10 Market integrity

CONCLUSION Regulatory scrutiny is increasing, so now is the time to get your house in order, especially if you have not been through an examination. The SEC and FINRA examination priorities should serve as important building blocks to conduct your annual review of policies, procedures and business activities. Self-identifying and correcting deficiencies will be extremely useful in avoiding an investigation, examination or enforcement action. If you have any questions, please contact one of the Grant Thornton LLP professionals listed below.

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Contacts Michael C. Patanella
Audit Partner and US Asset Management Sector Leader
Asset Management
T +1 212 624 5258

Kristina Vieni
Leader, Special Attestation Reporting Solution Group
Metro New York/New England Market Territory
T +1 212 542 9612

1 SEC Office of Compliance Inspections and Examinations. “Examination Priorities for 2016,” Jan. 11, 2016.
2 Financial Industry Regulatory Authority. “2016 Regulatory and Examination Priorities Letter,” Jan. 5, 2016.