A strong compliance program helps you achieve your business goals, supports your employees and your clients, and keeps you in your regulators’ good graces.  In its 2022 Examination Priorities Report, the SEC has identified several areas of focus for Investment Advisors. These include significant areas of focus such as private funds, ESG Investing, standards of conduct, information security and emerging technology. They also highlighted core areas that they will be reviewing during examinations of Investment Advisors such as marketing, custody, valuation, conflicts, and related disclosures. They called out specific areas of concern, including ensuring that investment advice is in each client’s best interest, the oversight of service providers ensuring that sufficient resources exist to perform compliance duties. Below are some of the SEC’s specific concerns.

It’s no surprise that a growing market for sophisticated investors would draw scrutiny when the hurdle for sophistication has effectively dropped over time while an expanding segment of the marketplace has become increasingly opaque.