SEC Announces 2016 Priorities

Last week we got FINRA's 2016 priorities, and this week the SEC announced theirs. The table below summarizes the 2015 vs. 2016 priorities, with new areas highlighted in green. Blue highlighting indicates areas that were mentioned in the 2015 priority letter, but have since been called out in more detail in 2016.

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Of the new items, the Re-TIRE program is a continuation of an initiative the SEC began in June 2015, focusing on retirement savings accounts for potential conflicts of interest, supervision and disclosure issues, as well as the reasonableness of recommendations made within those accounts. The new addition of Variable Annuities and Public Pension Advisors, as they are described in the 2016 letter, can also be seen as a continuation of the agency's focus on investor retirement savings.

Within the product area, the focus on ETFs will center on "sales strategies, trading practices, and disclosures involving ETFs, including excessive portfolio concentration, primary and secondary market trading risks, adequacy of risk disclosure, and suitability, particularly in niche or leveraged/inverse ETFs." These issues may also be connected to the new Product Promotion line item which will "focus on detecting the promotion of new, complex, and high risk products and related sales practice issues to identify potential suitability issues and potential breaches of fiduciary obligations."

Over the next few weeks, using data from RegTelligence™, we will take a look back at both FINRA and the SEC's enforcement records for 2015, comparing their actual activity with the priorities they outlined last January. We believe this exercise will be informative to those who must prepare to respond to FINRA and/or the SEC's new priorities released this week.

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