SEC releases 2023 examination priorities for investment advisers

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SEC releases 2023 examination priorities for investment advisers

15 February 2023

On February 7, the Division of Examinations within the U.S. Securities and Exchange Commission (the SEC) released its annual list of examination priorities for investment advisers regulated by the SEC under the U.S. Investment Advisers Act of 1940 (the “Advisers Act”), as well as investment companies under the U.S. Investment Company Act of 1940 and broker-dealers under the U.S. Securities Exchange Act of 1934. The 2023 priorities report follows one of the SEC’s most active years with respect to proposed rulemaking for private fund sponsors. Many of last year’s proposed rules are expected to become effective in some form later this year.

This year’s list represents more continuity than rupture with the 2022 list. Nonetheless, the SEC in 2023 is highlighting as a top priority the new marketing rule, which took effect for registered investment advisers (RIAs) in November 2022. As in past years, the Division expects to focus on RIAs to private funds, following a wide-ranging set of comprehensive new rules for private funds proposed last February, as well as adherence to applicable fiduciary duties. Priorities also include two perennial hot topics – environmental, social, and governance (ESG) standards and information security (especially cybersecurity). The SEC also last year proposed new rules for cybersecurity and ESG that will, upon finalization, impact private funds.

Notably, the priorities list is the first to be released under the Division’s new director, Richard R. Best, who was appointed in May 2022 and had served in an acting capacity since March 2022, previously serving as director of the SEC’s New York regional office. Under its new leadership, the Division elucidated “four pillars” for its long-standing mission: (i) promote compliance; (ii) prevent fraud; (iii) monitor risk; and (iv) inform policy.