A top priority next year of Securities and Exchange Commission examiners will be sales practices used with baby boomers and others saving for retirement, says SEC Office of Compliance Inspections and Examinations Assistant Director Renee Esfandiary.

In particular, the SEC is concerned about the sales practices advisors use and investments they recommend when their clients roll over company-sponsored pension plans such as 401(k)s into individual retirement accounts (IRAs), Esfandiary said on a panel at the annual conference of the National Society of Compliance Professionals in suburban Washington, D.C.

In examining registered investment advisors, the OCIE will continue to focus on problems with cyber security, dual registrations and use of alternative-investment mutual funds. Esfandiary noted the number of alternative mutual funds and the assets under management in them have doubled in the last four years. The top three matters regarding alternative investments that examiners will be reviewing at RIA firms include liquidity, leverage and conflicts of interest, she added.

Panelist Dan Kahl, assistant director of the Office of Investment Advisor Regulation in the SEC's investment management division, said the SEC may offer more guidance on the custody rule.

He said the division is finding lots of custody deficiencies at advisory firms -- some serious lapses and some minor.

“It can’t be that the whole industry is just a bunch of robbers,” interjected Stephanie Monaco, a partner with the law firm Mayer Brown and the panel’s moderator.

Kahl countered: “We don’t believe (advisors) are all thieves, but that doesn’t lessen the importance of the rule.”
 
He said the advertising rule, which was written in 1962, needs updating, but he didn’t indicate when it would be revised.