OCIE 2017 Examination Priorities Illustrate Continued Focus on Conflicts of Interest; Branch Offices; Advisers Employing Bad Actors; Oversight of FINRA; Use of Data Analytics; and Cybersecurity 

The SEC’s Office of Compliance Inspections and Examinations (OCIE) has detailed its plans and goals for 2017. Several of the priorities identified by OCIE – including cybersecurity and anti-money laundering (AML) initiatives – have been priorities in previous years. See “OCIE Outlines Examination Priorities for 2016” (Jan. 14, 2016). At the same time, the 2017 initiatives also illustrate a significant shift with new priorities – notably, enhanced oversight of FINRA in order to protect investors. The release also acknowledges OCIE’s expanded use of data analytics to identify industry practices and registrants with high-risk profiles. OCIE’s priorities provide insight for hedge, private equity and other private fund advisers into the regulator’s priorities and areas of focus in the coming year. This article analyzes OCIE’s release, presenting the key points most relevant to private fund advisers along with interpretations and insights from lawyers and former SEC officials at the forefront of interactions between the financial sector and the regulators. For more on SEC priorities, see “Outgoing SEC Chair Outlines New Model for Enforcement Priorities in 2017 and Beyond” (Jan. 12, 2017); and “What the SEC’s Enforcement Statistics Reveal About the Regulator’s Focus on Hedge Funds and Investment Advisers” (Oct. 20, 2016).

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