In October, the SEC released its examination priorities for 2024. Broadly, the SEC will prioritize areas that pose emerging risks to investors or the markets. Focus areas include marketing practices, conflicts of interest, operational resiliency, and emerging financial technology.
The Division has stated in order to support the evolving and ever-changing markets they expect to increase their engagement through increased in-person fieldwork, compliance outreach events, speaking engagements, among other touch points.
As with previous years, the Division continues to prioritize examinations of advisers that have never been examined, including recently registered advisers, and those that have not been examined for a number of years.
Of special interest in 2024, the Commission adopted rule changes to shorten the standard settlement cycle for most broker-dealer transactions from two business days after the trade date to one business day after the trade date. In connection with this change, the Division will assess registrant preparations associated with this shortening of the settlement cycle, which has a compliance date of May 28,2024.
A change from previous years’ examination focus is that the SEC made no direct reference to ESG in the 2024 exam priorities; however, the published priorities are not exhaustive of what could be reviewed for any entity.
The division of examinations is broken down into the following categories: (1) InvestmentAdvisers, (2) Investment Companies, (3) Broker-Dealers, (4) Self-Regulatory Organizations, (5) Clearing Agencies, (6) Municipal Advisors, (7)Security-Based Swap Dealers, and (8) Transfer Agents. Compliance professionals are encouraged to review their category in full within the report to develop their go forward 2024 areas of focus.
Risk areas for all divisions.
The key emerging risk areas that may impact investors or various market participants, as outlined in the report are as follows: