The Securities and Exchange Commission will be focusing a little more closely on public pension advisors and the methods of product promotion as 2016 advances, according to an announcement made Monday by the SEC Office of Compliance Inspections and Examinations (OCIE).
Also part of the focus for the New Year will be liquidity controls and two popular investment products, exchange-traded funds and variable annuities, says the SEC. Cyber security, microcap fraud, fee selection and reverse churning, which came under special scrutiny last year, also will continue as priorities in 2016.
“These new areas of focus are extremely important to investors and financial institutions across the spectrum,” says SEC Chair Mary Jo White. “Through information sharing and conducting comprehensive examinations, OCIE continues to promote compliance with the federal securities laws to better protect investors and our markets.”
“For the last four years, OCIE’s transparency and information sharing has helped inform the industry,” adds OCIE Director Marc Wyatt. “We hope that SEC registrants will use this information to inform the evaluation of their own compliance programs in these key areas.”
In particular, one of OCIE’s goals for this year is to protect retail investors saving for retirement. OCIE will continue several 2015 initiatives to assess risks to retail investors seeking information, advice, products and services to help them plan for and live in retirement. It also will review exchange-traded funds and ETF trading practices, variable annuity recommendations and disclosures, and potential conflicts and risks involving advisors to public pension funds, according to the SEC announcement.
To help fulfill the SEC’s mission of maintaining fair, orderly and efficient markets, OCIE will continue its focus on cyber security controls at broker-dealers and investment advisors. For 2016 the office will evaluate broker-dealers’ and investment advisors’ liquidity risk management practices.
Advances in technology will enable the office to analyze large amounts of data that will help SEC examiners’ uncover more money laundering schemes, detect microcap fraud and review for excessive trading, the SEC says. Data analytics also will help examiners focus on the financial firms’ promotions of new, complex and high-risk products.