The following are summaries of key developments in the investment management industry. To read the full articles on these and other topics, please click here.

SEC, FINRA Release 2016 Examination Priorities

The Financial Industry Regulatory Authority (FINRA) and the U. S. Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) published their examination priorities for 2016. Both OCIE and FINRA are increasing their examination focus on protection of retail investors, market risks posed by technology, anti-money laundering (AML) compliance, and issues related to liquidity.

The annual publication of these examination priorities provides securities industry participants a useful window into the thinking of FINRA and the SEC staff as to the most important risks facing the industry. Market participants should take the opportunity to review their policies, procedures, and operations in the indicated areas, to ensure that the identified risks have been addressed

SEC Seeks to Increase Investment Adviser Examinations

A senior official at the U. S. Securities and Exchange Commission (SEC) has announced that the SEC intends to increase the number of examinations that SEC-registered investment advisers that its staff conducts each year. The SEC staff has been concerned for some time that the examination rate for investment advisers, which in 2015 was 10 percent, is too low. By contrast, the examination rate for SEC-registered broker-dealers was just over 50 percent.
The process to increase the examination rate is beginning with the reassignment of approximately 100 current staff members from examining broker-dealers to examining investment advisers. The transition process is expected to be completed by the end of 2016. The SEC also is still considering using third-party firms to conduct examinations of SEC-registered investment advisers, but no formal actions have been taken, and the assistant director of the SEC’s Division of Investment Management stated that such a plan was unlikely to be adopted during 2016.

To learn more about these developments and other investment management news, please contact a member of the Ballard Spahr Investment Management Group or the attorney with whom you regularly work.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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