The SEC’s Office of Compliance Inspections and Examinations issued its 2016 Examination Priorities, focusing on ETFs, retail retirement advice, account selection, and private funds. The OCIE staff plans on conducting exams into whether ETFs comply with applicable exemptive orders and the process for unit creation and redemption. Continuing a focus from last year, OCIE will continue its “multi-year examination initiative” on RIAs and BDs that offer advice, services and products to retirement accounts. The staff will also continue to examine how dually registered firms recommend accounts such that a client does not incur unnecessary brokerage or asset management fees. OCIE will also examine how private funds manage side-by-side accounts and other conflicts while also reviewing private placement due diligence, disclosure, and suitability.
OUR TAKE: Although shorter than the FINRA priorities letter, the SEC addresses broad themes that affect RIAs, BDs, ETF sponsors, private fund managers, and clearing firms. ETF sponsors and private fund managers, in particular, need to get their compliance houses in order.