SEC Trends & Developments - Spring 2013 - National Examination Program 2013 Priorities

The Office of Compliance Inspections and Examinations ("OCIE") protects investors through administering the SEC's nationwide examination program (“NEP”) and inspection program.  Examiners in Washington DC and in the Commission's 11 regional offices conduct examinations of the nation's registered entities including broker-dealers, transfer agents, investment advisors, investment companies, national securities exchanges, clearing agencies, SROs such as the Financial Industry Regulatory Authority ("FINRA") and the Municipal Securities Rulemaking Board, and the Public Company Accounting Oversight Board ("PCAOB").  OCIE’s mission is to protect investors, ensure market integrity and support responsible capital formation through risk-focused strategies that: (1) improve compliance; (2) prevent fraud; (3) monitor risk; and (4) inform policy.  The examination program plays a critical role in encouraging compliance within the securities industry, which in turn also helps to protect investors and the securities markets generally.

The priorities listed below are set by the staff and are aligned with the SEC’s mission to improve compliance, prevent fraud, inform policy and monitor firm-wide and systemic risk.

The priorities for 2013 are the result of information reported by registrants in required filings, information gathered through examination conducted by the NEP and other regulators, communication with other U.S. and international regulators and agencies, industry and media publications, comments and tips, data maintained in third party databases, and interaction with registrants, industry group and service providers.

The NEP has identified certain risk areas that apply to nearly all registrants.  Those risks include fraud detection and prevention, corporate governance and enterprise risk management, conflicts of interest and technology.

The NEP has also identified specific ongoing risks, new and emerging risks, and policy topics under its Investment Advisory/Investment Company exam program, Broker-Dealer exam program, Market Oversight exam program and Clearance and Settlement exam program. 

Ongoing risks are those that are common to most of the business models utilized by a particular category of registrants and have existed for a sustained period, and, in the staff’s opinion, will continue for the foreseeable future.  Those risks include safety of assets, conflicts of interest related to compensation arrangements and allocation of investment opportunities.

New and emerging risks are issues and business practices that pose increased risk due to changes and developments in the industry, new products or investment strategies, technology, regulation, and business combinations.  Those risks include new registrants, alternative investment companies, and payments made to distributors and intermediaries.

Policy topics are areas in which the NEP has an interest in gaining a better understanding of particular practice or learning the particular application of adopted rules and guidance. Those areas include money market funds and compliance with pay-to-play rules.

The full details of this program can be seen at 

SEC Trends & Developments - Spring 2013 - Issue 

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