What To Expect From The SEC In 2013

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SEC logo       On February 21, the  Securities Exchange and Commission (the “SEC”)    published its examination priorities for 2013 and shed some light as to what to expect from the SEC in 2013.Carlo V. di Florio, Director of the SEC’s Office of Compliance Inspections and Examinations, stated that the purpose of the 2013 priorities were to “promote compliance and communicate with investors and our registrants about areas that we perceive to have heightened risk.”  The priorities cover a range of issues at financial institutions, including broker-dealers, clearing agencies, exchanges and self-regulatory organizations, investment companies, hedge funds, private equity funds, and transfer agents.

The market-wide priorities include fraud detection and prevention, corporate governance and enterprise risk management, conflicts of interest, and technology controls. Specifically, the priorities noted in each program area include the following:

  • For investment advisers and investment companies — presence exams for newly registered private fund advisers, and payments by advisers and funds to entities that distribute mutual funds;
  • For broker-dealers — sales practices and fraud, as well as compliance with the new market access rule;
  • For market oversight — risk-based examinations of securities exchanges as well as FINRA, and order-type assessment;
  • For clearing and settlement — for transfer agent exams, timely turnaround of items and transfers, accurate recordkeeping, and safeguarding of assets. Finally, for clearing agencies designated as systemically important, conducting annual examinations as required by the Dodd-Frank Act.

The SEC noted that the priority list was not exhaustive and that priorities may be adjusted throughout the year in light of ongoing risk assessment activities.

Senior exam staff, management from the SEC’s 12 regional offices, and other SEC divisions and offices selected the examination priorities for 2013 in consultation with each of the Commissioners, based upon a variety of information and risk analytics, including:

  • Tips, complaints and referrals, including from whistleblowers, customers and investors;
  • Information reported by registrants in required filings with the Commission;
  • Information gathered through examinations conducted by the SEC and other regulators;
  • Communications with other U.S. and international regulators and agencies;
  • Industry and media publications;
  • Data maintained in third party databases; and
  • Interactions with registrants, industry groups, and service providers (outside of examinations).

Special thanks to contributing writer Jennifer Juste, Esq.

Anna Timone (195 Posts)


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