The Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) announced that it will prioritize its 2019 examinations on six areas, including digital assets and cybersecurity.
The four other priorities are compliance and risk at registrants responsible for critical market infrastructure; matters of importance to retail investors, including seniors and those saving for retirement, the Financial Industry Regulatory Authority, Inc. (FINRA) and Municipal Securities Rulemaking Board (MSRB) and anti-money laundering programs.
“OCIE continues to thoughtfully approach its examination program, leveraging technology and the SEC staff's industry expertise,” SEC Chairman Jay Clayton said in a statement. “As these examination priorities show, OCIE will maintain its focus on critical market infrastructure and main street investors in 2019.”
OCIE said it will closely examine digital assets because the market for cryptocurrencies has grown rapidly but may present risks to investors. The number of digital asset market participants, including broker-dealers, trading platforms and investment advisors also continues to increase.
“Given the significant growth and risks presented in this market, OCIE will continue to monitor the offer and sale, trading and management of digital assets, and where the products are securities, examine for regulatory compliance,” the SEC said.
On cybersecurity, OCIE examiners will emphasize proper configuration of network storage devices, security governance, and policies and procedures related to retail trading information security.
The SEC will continue to examine entities that provide critical services to capital markets, including clearing agencies, national stock exchanges and transfer agents.
Clayton has emphasized protection of retail investors, and OCIE said it will continue to examine in 2019 the disclosure and calculation of fees, expenses and other charges investors pay. OCIE examiners will also look at supervision of employees who sell products and services to investors.
OCIE will also continue to examine Financial Industry Regulatory Authority (FINRA) and Municipal Securities Rulemaking Board’s (MSRB) operations.
On anti-money laundering (AML), examiners will review compliance with applicable AML requirements.
The SEC said that the 2019 examination priorities will not be the only issues OCIE will review.
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