DISCLAIMER: This statement represents the views of the staff of the Division of Examinations. It is not a

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Examination Priorities
Fiscal Year 2026
Division of Examinations

DISCLAIMER: This statement represents the views of the staff of the Division of Examinations. It is not a 
rule, regulation, or statement of the U.S. Securities and Exchange Commission (SEC or Commission). The 
Commission has neither approved nor disapproved its content. This statement, like all staff statements, has no 
legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations 
for any person.

EXAMINATION PRIORITIES: FISCAL YEAR 2026    |  iii
CONTENTS
MESSAGE FROM THE LEADERSHIP TEAM   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .1
DIVISION OF EXAMINATIONS: FISCAL YEAR 2026 EXAMINATION PRIORITIES   .   .   .   .  5
I . Investment Advisers    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  5
A . Adherence to Fiduciary Standards of Conduct    .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  5
B . Effectiveness of Advisers’ Compliance Programs   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  6
C . Never-Examined Advisers and Recently Registered Advisers   .   .   .   .   .   .   .   .   .  7
II . Investment Companies   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  7
III .   Broker-Dealers   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  7
A . Broker-Dealer Financial Responsibility Rules   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  7
B . Broker-Dealer Trading-Related Practices and Services   .   .   .   .   .   .   .   .   .   .   .   .   .  8
C . Retail Sales Practice, Including Compliance with Regulation Best Interest   .8
IV .  Self-Regulatory Organizations   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .9
A . National Securities Exchanges   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  9
B .   FINRA   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .9
C . Municipal Securities Rulemaking Board (MSRB)   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  9
V .   Clearing Agencies    .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .9
VI . Other Market Participants   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .10
A . Municipal Advisors   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .10
B . Transfer Agents   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .10
C . Funding Portals   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  11
D .   Security-Based Swap Dealers (SBSDs)   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  11
E . Security-Based Swap Execution Facilities (SBSEFs)    .   .   .   .   .   .   .   .   .   .   .   .   .   .  11
VII . Risk Areas Impacting Various Market Participants   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  11
A . Information Security and Operational Resiliency   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .11
1 . Cybersecurity   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .11
2 . Regulation S-ID and Regulation S-P   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .12
B . Emerging Financial Technology   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .12
C . Regulation Systems Compliance and Integrity (SCI)   .   .   .   .   .   .   .   .   .   .   .   .   .   .13
D .   Anti-Money Laundering   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .13

iv    |  DIVISION OF EXAMINATIONS
Under the leadership of Chairman Atkins, 
we have reassessed how best to deploy our 
resources to meet growing responsibilities, as 
well as evolving risks shaped by developments in 
the U .S . capital markets and broader economic 
and geopolitical forces . 
—Division of Examinations Leadership Team   
“
”

EXAMINATION PRIORITIES: FISCAL YEAR 2026    |  1
MESSAGE FROM THE 
LEADERSHIP TEAM
C
hanges in the U.S. capital markets and at the SEC present new opportunities for growth, 
innovation and refinement of our approach to delivering on the Commission’s mission to protect 
investors, maintain fair and orderly capital markets, and facilitate capital formation. As the 
Division of Examinations (the Division) embarks on a new fiscal year, we remain grounded in 
advancing our Four Pillars to promote compliance, prevent fraud, inform policy, and monitor risk. At the 
same time, we continue to adapt to evolving market forces to ensure the Division’s mission is met. This new 
fiscal year marks an important time for the Division to build on our strengths, advance our mission with 
renewed focus, and ensure that our examination program continues to align with the Commission’s overall 
direction and the expectations of the investing public. 
The dedication of our talented staff continues to be the backbone of the Division. While operating with 
fewer resources, they have shown an unwavering commitment to serve as the “eyes and ears” of the 
Commission. Maintaining connections with registrants, investors and other market participants through 
their regular interactions, Division staff continue to provide invaluable insight into market trends, product 
developments, and shifting risks that inform the Commission. They carry out their responsibilities with focus 
and efficiency, ensuring that our risk-based examinations remain effective and responsive to the needs of 
investors and the marketplace. 
Under the leadership of Chairman Atkins, we have reassessed how best to deploy our resources to meet 
growing responsibilities, as well as evolving risks shaped by developments in the U.S. capital markets and 
broader economic and geopolitical forces. This involves reevaluating our risk-based priorities and how we 
approach various trends in the markets, new and emerging products and services, and our processes to 
ensure our examinations continue to be efficient and effective. Importantly, it also means exploring ways 
to empower registrants and investors alike by providing transparency of key examination observations; 
maintaining focused engagement through our national and regional outreach events; strengthening our 
partnership with the Divisions of Trading and Markets and Investment Management; and publishing Risk 
Alerts that highlight observed compliance approaches that registrants may consider in strengthening their 
compliance programs. Committed to continuous improvement, the Division’s leadership has advanced 
a series of strategic projects, including an operational effectiveness framework, to ensure increased 
consistency across examinations and deepen connectivity with our partners in other divisions and offices 
at the Commission. We believe these enhancements complement the structural evolution resulting from the 
reshaping of our workforce. 

2    |  DIVISION OF EXAMINATIONS
As has long been true, promoting compliance is an essential part of our four-pronged mission. Effectively 
delivering on this mission requires deliberate and active partnerships with compliance professionals who 
serve with us on the front lines of protecting investors. We recognize that market participants are navigating 
an increasingly complex and changing financial and regulatory environment. By sharing key observations 
from examinations, conducting focused engagements with industry and market participants, and publishing 
documents, such as our annual priorities, we strive to improve compliance in a way that that we believe is 
both transparent and practical. Although it is the registrants’ responsibilities to maintain their own robust 
compliance programs, we recognize the role the Division can play in supporting our shared interests in 
protecting investors and facilitating efficient capital formation. When effectively implemented, our efforts 
will support registrants, strengthen their ability to meet regulatory obligations and comply with federal 
securities laws. 
We accomplish our responsibility to inform policy primarily through collaboration and shared focus with 
Trading and Markets, Investment Management, and other divisions and offices at the SEC. We share our 
examination observations with other divisions and offices, providing firsthand, real-world insight that 
informs their understanding of market activity and practices, and ensuring that our collective efforts remain 
aligned and advances the broader mission of the Commission. Conversely, the policy divisions provide 
invaluable information, insights and support to the Division through legal interpretation, subject matter 
expertise and analytics, and training, among other activities. In that way, our priorities reflect a collaborative 
process that draws on engagement and ongoing dialogue across the agency, as well as insights from Division 
staff based on examinations and market observations. That collaboration is critical to the overall success of 
the agency in delivering its mission to the American people.

EXAMINATION PRIORITIES: FISCAL YEAR 2026    |  3
Keith E. Cassidy
Director 
LEADERSHIP TEAM
Allison M. Fakhoury
National Clearance and 
Settlement Program 
Director
Marshall M. Gandy
National Investment 
Adviser/Investment 
Company Program Director
Kevin W. Goodman
National FINRA and 
Securities Industry 
Oversight Program Director
Alexis L. Hall
National Technology 
Controls Program  
Director
Vanessa L. Horton
National Investment 
Adviser/Investment 
Company Program Director
Michael G. Rufino
National Broker-Dealer 
and Exchange Program 
Director



EXAMINATION PRIORITIES: FISCAL YEAR 2026    |  5
T
he Division develops its examinations 
priorities in coordination and 
consultation with the other divisions 
and offices throughout the SEC 
and by considering, among other things, prior 
years’ examinations, market events, information 
gathered through participation in conferences and 
conversations with investors, registrants, industry 
groups, and other regulators. They reflect practices, 
products, and services that the Division believes 
present potentially heightened risks to investors 
or integrity to the U.S. capital markets. They are 
not the only areas the Division will address in 
examinations. The Division will devote resources to 
and cover other areas. The Division is continuously 
assessing these risks and discussing with its 
colleagues around the SEC how it can best support 
the SEC’s mission and priorities. Further, the 
Division’s priorities may shift in response to new 
or emerging risks, products and services, market 
events or investor concerns. 
The Division welcomes comments and suggestions 
regarding how it can better fulfill its mission to 
promote compliance, prevent fraud, identify and 
monitor risk, and inform SEC policy. Contact 
information is available at SEC.gov/exams. If you 
suspect or observe activity that may violate the 
federal securities laws or otherwise operate to 
harm investors, please notify the SEC at SEC.gov | 
Welcome to Tips, Complaints, and Referrals. 
I. INVESTMENT ADVISERS 
A. Adherence to Fiduciary Standards 
of Conduct 
Examining investment advisers’ (adviser) adherence 
to their duty of care and duty of loyalty obligations 
remains a priority for the Division, particularly 
with regard to aspects of their business that serve 
retail investors.
The Division will review investment advice 
and related disclosures provided to clients for 
consistency with their fiduciary obligations, such 
as: (1) the impact of advisers’ financial conflicts of 
interest on providing impartial advice; (2) advisers’ 
consideration of the various factors associated 
with their investment advice, such as generally the 
cost, investment product’s or strategy’s investment 
objectives, characteristics (including any special 
or unusual features), liquidity, risks and potential 
benefits, volatility, likely performance in a variety 
of market and economic conditions, time horizon, 
and cost of exit; and (3) advisers seeking best 
execution with the goal of maximizing value for 
their clients under the particular circumstances 
occurring at the time of the transaction. Moreover, 
the Division will focus on: 
• Investment products with the following 
strategies or characteristics: (1) alternative 
investments (e.g., private credit and private 
funds with investment lock-up for extended 
DIVISION OF EXAMINATIONS:  
FISCAL YEAR 2026  
EXAMINATION PRIORITIES

6    |  DIVISION OF EXAMINATIONS
periods); (2) complex investments (e.g., 
exchange-traded funds (ETF) wrappers on 
less liquid underlying strategies, option-based 
ETFs, and leveraged and/or inverse ETFs); and 
(3) products that have higher costs associated 
with investing (e.g., high commissions and 
higher investment expenses than similar 
products/investments). 
• Investment recommendations for consistency 
with product disclosures and the clients’ 
investment objectives, risk tolerance, and 
financial/personal backgrounds, with emphasis 
on: (1) recommendations to older investors 
and those saving for retirement; (2) advisers to 
private funds that are also advising separately 
managed accounts and/or newly registered 
funds (e.g., reviewing for favoritism in 
investment allocations and interfund transfers); 
(3) advisers to newly launched private funds; 
(4) recommendations of certain products 
that may be particularly sensitive to market 
volatility; and (5) advisers that have not 
previously advised private funds (e.g., reviewing 
for regulatory awareness, liquidity, valuation, 
fees, disclosures, and differential treatment of 
investors, including use of side letters). 
In addition, the Division will focus on particular 
types of advisers and advisory services or business 
practices that may create additional risks and 
potential or actual conflicts of interest. Examples 
include: (1) advisers that are dually registered as 
broker-dealers, particularly where such advisers 
have advisory representatives who are also dually 
licensed as registered representatives and receive 
compensation or other financial incentives that may 
create conflicts of interest that must be addressed 
(e.g., account recommendations and allocations); 
(2) advisers utilizing third-parties to access clients’ 
accounts, where controls may be insufficient to 
protect client assets and data; and (3) advisers that 
have merged or consolidated with, or been acquired 
by, existing advisory practices, which may result 
in accompanying operational and/or compliance 
complexities or new conflicts of interest. 
B. Effectiveness of Advisers’ 
Compliance Programs
The Division’s assessment of the effectiveness of 
advisers’ compliance programs is a fundamental 
part of the examination process. Examinations 
focusing on this topic typically include an 
evaluation of the core areas of advisers’ compliance 
programs which include, as applicable and 
appropriate for each examination, marketing, 
valuation, trading, portfolio management, 
disclosure and filings, and custody. In addition, 
examinations on this topic typically include 
an analysis of advisers’ annual reviews of the 
effectiveness of their compliance programs. 
In reviewing advisers’ compliance policies and 
procedures, including those addressing advisers’ 
adherence to fiduciary principles, the Division 
continues to broadly focus on whether the 
policies and procedures address compliance with 
the Investment Advisers Act of 1940 and the 
rules thereunder and are reasonably designed to 
address conflicts of interest, in light of a firm’s 
particular operations, and to prevent advisers 
from placing their interests ahead of clients’ 
interests. Areas on which examinations may focus 
include: (1) whether the policies and procedures 
are implemented and enforced; and (2) whether 
disclosures address fee-related conflicts, with a 
focus on conflicts that arise from account and 
product compensations structures. 
The Division’s focus may also shift depending 
on an adviser’s practices or products, such as for 
advisers with activist engagement practices (e.g., 
whether they are making late or inaccurate filings 

EXAMINATION PRIORITIES: FISCAL YEAR 2026    |  7
on Schedules 13D and 13G; and Form 13F; Forms 
3, 4, and 5; and Form N-PX). Examinations may 
also focus on compliance practices when advisers 
change their business models or are new to advising 
particular types of assets, clients, or services.
C. Never-Examined Advisers and Recently 
Registered Advisers
As with previous years, the Division will prioritize 
examinations of advisers that have never been 
examined, with particular emphasis on recently 
registered advisers. 
II. INVESTMENT COMPANIES
The Division continues to prioritize examinations 
of registered investment companies (RICs or funds), 
including mutual funds and ETFs, due to their 
importance to retail investors, particularly those 
saving for retirement. 
Examinations of RICs will generally include their 
compliance programs, disclosures, filings (e.g., 
summary prospectus) and governance practices. 
RIC operations of particular focus include: (1) fund 
fees and expenses, and any associated waivers and 
reimbursements; and (2) portfolio management 
practices and disclosures, for consistency with 
statements about investment strategies or 
approaches, with fund filings and marketing 
materials, and the amended fund “Names Rule”
1
 
(after the compliance date). 
1      SEC,      Final Rule: Investment Company Names, Release No. IC-35000 (Sept. 20, 2023) (broadening the scope of the 
requirement under the Investment Company Act of 1940 rule 35d-1 (the “Names Rule”) for certain funds to adopt a 
policy to invest at least 80 percent of the value of their assets in accordance with the investment focus the fund’s name 
suggests, and updating other names-related regulatory requirements, including by providing enhanced disclosure and 
reporting requirements related to terms used in fund names and by establishing additional recordkeeping requirements). 
See also SEC, Investment Company Names, Release No. IC-35500 (Mar. 14, 2025) (extending the compliance date for 
the Names Rule amendments from Dec. 11, 2025, to Jun. 11, 2026, for larger fund groups and from Jun. 11, 2026, to 
Dec. 11, 2026 for smaller fund groups).
The Division will also continue to monitor certain 
developing areas of interest. The following are 
examples of staff areas of interest: (1) RICs that 
participate in mergers or similar transactions, 
including any associated operational and 
compliance challenges; (2) certain RICs that use 
complex strategies and/or have significant holdings 
of less liquid or illiquid investments (e.g., closed end 
funds), including any associated issues regarding 
valuation and conflicts of interest; and (3) RICs 
with novel strategies or investments, including 
funds with leverage vulnerabilities.
As with adviser examinations, the Division will 
continue its prioritization of never-before-examined 
RICs, with particular emphasis on recently 
registered RICs to help empower and encourage 
RICs in building robust compliance programs. 
III. BROKER-DEALERS
A. Broker-Dealer Financial 
Responsibility Rules
Examinations will continue to focus on broker-
dealer compliance with the net capital rule, the 
customer protection rule and related internal 
processes, procedures, and controls. Areas of 
review will include the timeliness of financial 
notifications and other required filings. Reviews 
will focus on a firm’s operational resiliency 
programs, including supervision of third-party/
vendor-provided services that contribute to 
the records used to prepare financial reporting 
information and change management for 

8    |  DIVISION OF EXAMINATIONS
broker-dealers. Examiners will also assess 
broker-dealer credit, market, and liquidity risk 
management controls to determine whether 
firms have sufficient liquidity to manage stress 
events. Finally, examinations will evaluate cash 
sweep programs and prime brokerage activities, 
including issues of concentration, liquidity, and 
counterparty credit risks.
B. Broker-Dealer Trading-Related 
Practices and Services
A focus on broker-dealer equity and fixed income 
trading practices remains a Division priority. 
Areas of review will include broker-dealer trading 
practices associated with extended hours trading, 
and municipal securities, including the rates reset 
process on variable rate demand obligations, 
priority of orders, and mark-ups disclosure. The 
Division will also review broker-dealers’ routing 
and execution of orders. These reviews will include: 
(1) best execution; (2) the pricing and valuation of 
illiquid instruments such as variable rate demand 
obligations, other municipal securities, and 
non-traded REITs; and (3) disclosures regarding 
order routing and order execution information, 
including as required by Rule 605 under 
Regulation NMS.
2
With respect to Regulation SHO, the Division will 
review whether broker-dealers are appropriately 
relying on the bona fide market making exception, 
including whether quoting activity is away from the 
inside bid/offer. Finally, the Division will examine 
alternative trading systems, including a focus on 
their compliance with the requirements to have 
written safeguards to protect subscriber confidential 
information under Rule 301(b)(1) under Regulation 
ATS, alignment with their descriptions in the Form 
ATS-N, disclosures, and risk controls.
2 17 CFR 242.605.
C. Retail Sales Practice, Including 
Compliance with Regulation Best Interest
The Division will continue to examine broker-
dealer sales practices, including those related 
to Regulation Best Interest, and focus on the 
following areas of interest: (1) recommendations 
with regard to products and investment strategies 
(including account and rollover recommendations); 
(2) conflict identification and mitigation practices, 
in particular with respect to recommendations 
of accounts, rollovers, and recommendations 
involving limited product menus; (3) processes for 
reviewing reasonably available alternatives; and 
(4) processes for satisfying the Care Obligation, 
including consideration of particular factors in a 
customer’s investment profile and the product and 
account type characteristics considered.
In particular, examinations will focus on those 
recommended products that are complex or 
tax advantaged, such as variable and registered 
index-linked annuities; ETFs that invest in illiquid 
assets such as private equity or private credit; 
municipal securities, including 529 Plans; private 
placements; structured products; alternative 
investments; and other products that have complex 
fee structures or return calculations, are based 
on exotic benchmarks, are illiquid, or represent a 
growth area for retail investment. Examinations 
may also focus on recommendations: (1) that move 
an investment to a substantially similar product; 
(2) related to opening different account types such 
as option, margin, and self-directed IRA accounts; 
and (3) made to older investors and those saving 
for retirement or college. 
Examinations may also focus on dual registrants 
and encompass reviews of firms’ processes 
for identifying and mitigating and eliminating 
conflicts of interest where dual registrants receive 

EXAMINATION PRIORITIES: FISCAL YEAR 2026    |  9
compensation or other financial incentives that may 
create conflicts of interest that must be addressed, 
account allocation practices (e.g., allocation of 
investments where an investor has more than one 
type of account) and account selection practices 
(e.g., brokerage versus advisory, including 
when rolling over employer plans to an IRA or 
transferring an existing brokerage account to an 
advisory account, as well as recommendations to 
open wrap fee accounts). Examinations may also 
assess broker-dealer supervision of sales practices at 
branch office locations.
The Division’s examinations will review the content 
of a broker-dealer’s relationship summary (Form 
CRS), such as how the broker-dealer describes: 
(1) the relationships and services that it offers 
to retail investors; (2) its fees and costs; (3) its 
conflicts of interest; and (4) whether the broker-
dealer accurately discloses its and its financial 
professionals’ disciplinary history.
IV. SELF-REGULATORY 
ORGANIZATIONS
A. National Securities Exchanges
The Division will examine the national securities 
exchanges to assess whether they are meeting 
their obligations to enforce compliance with 
self-regulatory organization rules and the federal 
securities laws. Examinations may focus on 
regulatory programs and participation in National 
Market System Plans.
B. FINRA
FINRA, among other things, promulgates rules 
that govern its members, provides a forum for 
securities arbitration and mediation, conducts 
market regulation, including by contract for the 
national securities exchanges, reviews broker-
dealer advertisements, administers the testing 
and licensing of registered persons, and operates 
industry utilities, such as Trade Reporting Facilities.
The Division conducts risk-based oversight 
examinations of FINRA. It selects areas within 
FINRA to examine through a risk assessment 
process designed to identify those aspects of 
FINRA’s operations important to the protection of 
investors and market integrity, including FINRA’s 
implementation of investor protection initiatives 
such as Regulation Best Interest and Form 
CRS. The assessment is informed by collecting 
and analyzing extensive information and data, 
regular meetings with key functional areas within 
FINRA, and outreach to various stakeholders, 
including investor and industry groups. Based on 
the outcome of this risk assessment process, the 
Division conducts inspections of FINRA’s major 
regulatory programs. The Division also conducts 
oversight examinations of FINRA’s examinations 
of certain broker-dealers and municipal advisors 
that are FINRA members. From its observations 
during all of these inspections and examinations, 
the Division makes detailed recommendations to 
improve FINRA’s programs, its risk assessment 
processes, and its future examinations.
C. Municipal Securities Rulemaking 
Board (MSRB)
The Division also applies a risk assessment process, 
similar to the one it uses to oversee FINRA, to 
identify areas to examine at the MSRB. 
V. CLEARING AGENCIES 
Title VIII of the Dodd-Frank Act requires the 
Commission to examine, at least once annually, 
each clearing agency designated as systemically 
important and for which the Commission serves 

10    |  DIVISION OF EXAMINATIONS
as the supervisory agency. These examinations will 
focus on clearing agencies’ core risks, processes, 
and controls, and will cover the specific areas 
required by statute, including the nature of clearing 
agencies’ operations and assessment of financial 
and operational risk. 
Additionally, the Division will conduct risk-based 
examinations of other registered clearing agencies 
that have not been designated by statute as 
systemically important. The Division will examine 
for compliance with the Commission’s Standards 
for Covered Clearing Agencies, which are rules 
requiring policies and procedures that address core 
risk-management functions, including maintaining 
sufficient financial resources, protecting against 
credit risks, managing member defaults, and 
mitigating operational risk. 
Examinations of registered clearing agencies 
include both risk-based examinations and 
corrective action reviews, and are undertaken to 
assess: (1) whether the clearing agencies’ respective 
risk management frameworks comply with the 
Securities Exchange Act of 1934 (Exchange Act) 
and serve the needs of their members and the 
markets they serve; (2) the adequacy and timeliness 
of their remediation of prior deficiencies, including, 
for example, the role of senior leadership in the 
remediation process; and (3) other risk areas 
identified in collaboration with other Commission 
divisions and offices and other regulators. In 
addition, the Division examines security-based 
swap data repositories and entities operating 
pursuant to a Commission order exempting them 
from the clearing agency registration requirement 
under Section 17A(b)(1) of the Exchange Act. 
Areas of examination focus across registrant 
types may include risk management of liquidity, 
default management, recovery and wind-down, 
collateral management, operations, and operational 
arrangements with other clearing agencies, among 
other things. 
VI. OTHER MARKET PARTICIPANTS
A. Municipal Advisors
The Division will continue to examine whether 
municipal advisors have met their fiduciary duty to 
municipal entity clients when engaging in municipal 
advisory activities such as providing advice or 
recommendations regarding the pricing or method 
of sale of municipal securities (e.g., recommending 
a competitive versus negotiated sale). The Division 
will also continue to examine whether municipal 
advisors have complied with MSRB Rule G-42, 
which establishes the core standards of conduct 
and duties applicable to non-solicitor municipal 
advisors, including requirements to disclose 
conflicts of interest and to document municipal 
advisory relationships. Finally, the Division will 
continue to assess whether municipal advisors have 
made required filings with the Commission and 
met their professional qualification, registration, 
recordkeeping, and supervision requirements.
B. Transfer Agents
The Division will continue to examine transfer agent 
processing of items and transfers, recordkeeping 
and record retention, safeguarding of funds and 
securities, and filings with the Commission. 
Examinations will also focus on transfer agents 
that use emerging technology to perform their 
transfer agent functions. After the compliance 
date, the Division will also examine transfer agents 
for compliance with the 2024 amendments to 
Regulation S-P, including the safeguards rule, the 

EXAMINATION PRIORITIES: FISCAL YEAR 2026    |  11
disposal rule, and the requirement to establish 
incident response programs.
3
C. Funding Portals
The Division will focus on funding portal 
arrangements with qualified third-parties 
regarding the maintenance and transmission of 
investor funds and examine whether funding 
portals are making and preserving required 
records. In addition, the Division will review 
funding portals’ written policies and procedures 
to assess if they are reasonably designed to 
achieve compliance with applicable federal 
securities laws and rules relating to its business 
as a funding portal. After the compliance date, 
the Division may also examine funding portals 
for compliance with the 2024 amendments to 
Regulation S-P, including the safeguards rule, the 
disposal rule, and the requirement to establish 
incident response programs. 
D. Security-Based Swap Dealers (SBSDs)
The Division will continue to focus its 
examinations on whether SBSDs are complying 
with their obligations under Regulation SBSR to 
accurately report security-based swap transactions 
to security-based swap data repositories. As stated 
in the Division’s Risk Alert,
4
 accurate and complete 
security-based swap reporting that the investing 
public and the Commission can rely upon is crucial 
3      SEC,      Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information, Exchange 
Act Release No. 100155 (May 16, 2024). (Adopting amendments to Regulation S-P that apply to broker-dealers, 
funding portals, investment companies, SEC-registered investment advisers, and transfer agents registered with the 
SEC or another appropriate regulatory agency (collectively, “covered institutions”) and are designed to modernize and 
enhance the protection of consumer financial information by: (1) requiring covered institutions to develop, implement, 
and maintain written policies and procedures for an incident response program that is reasonably designed to detect, 
respond to, and recover from unauthorized access to or use of customer information; (2) requiring that the response 
program include procedures for covered institutions to provide timely notification to affected individuals whose 
sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization; and 
(3) broadening the scope of information covered by Regulation S-P’s requirements).
4      SEC,      Risk Alert: Observations Related to Security-Based Swap Dealers (Jan. 10, 2024). 
for the regulation and transparency of the security-
based swap markets. The Division also expects to 
focus on SBSDs’ risk management practices and 
compliance with capital, margin and segregation 
requirements. Finally, the Division continues to 
assess whether SBSDs have taken corrective action 
to address issues identified in prior examinations. 
E. Security-Based Swap Execution 
Facilities (SBSEFs) 
The Division expects to begin conducting 
examinations of registered SBSEFs focusing on 
the SBSEF’s rules and related internal policies 
and procedures addressing trade monitoring, 
trade processing, and participation. Moreover, 
the Division plans to assess how SBSEFs establish 
programs of risk analysis and oversight to identify 
and minimize sources of operational risk.
VII. RISK AREAS IMPACTING VARIOUS 
MARKET PARTICIPANTS
A. Information Security and Operational 
Resiliency
1. Cybersecurity
The Division will continue to review registrant 
practices to prevent interruptions to mission-critical 
services and to protect investor information, 
records, and assets. Operational disruption 
risks remain elevated due to the proliferation of 
cybersecurity attacks, firms’ dispersed operations, 

12    |  DIVISION OF EXAMINATIONS
weather-related events, and geopolitical concerns. 
The Division will also examine registrants’ 
procedures and practices to assess whether they 
are reasonably managing information security and 
operational risks. 
A perennial examination priority, the Division’s 
focus on cybersecurity practices by registrants 
remains vital to help ensure the safeguarding of 
customer records and information. Particular 
attention will be on firms’ policies and procedures 
pertaining to governance practices, data loss 
prevention, access controls, account management, 
and responses and recovery to cyber-related 
incidents, including those related to ransomware 
attacks. In addition, focus will be on training 
and security controls that firms are employing to 
identify and mitigate new risks associated with 
artificial intelligence (AI) and polymorphic malware 
attacks, including how they are operationalizing 
information from threat intelligence sources. 
Lastly, the Division will review firms’ operational 
resiliency.
2. Regulation S-ID and Regulation S-P
The Division will assess compliance with 
Regulations S-ID and S-P, as applicable. 
Examinations will focus on firms’ policies 
and procedures, internal controls, oversight of 
third-party vendors, and governance practices. 
Regarding Regulation S-ID, the Division will 
focus on firms’ development and implementation 
of a written Identity Theft Prevention Program 
(Program) that is designed to detect, prevent, and 
mitigate identity theft in connection with covered 
accounts. Specifically, the Division will assess the 
reasonableness of firms’ policies and procedures 
5      SEC,      Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information, Advisers Act 
Rel. No. 6604 (May 16, 2024). 
included within their Programs, including 
whether they: 
• Are reasonably designed to identify and detect 
red flags, particularly during customer account 
takeovers and fraudulent transfers; and 
• Include firm training on identity theft prevention. 
In preparation for the compliance dates for the 
Commission’s amendments to Regulation S-P,
5
 the 
Division will engage firms during examinations 
about their progress in preparing incident response 
programs reasonably designed to detect, respond 
to, and recover from unauthorized access to or 
use of customer information. After the applicable 
compliance dates, the Division will examine 
whether firms have developed, implemented, and 
maintained policies and procedures in accordance 
with the rule’s new provisions that address 
administrative, technical, and physical safeguards 
for the protection of customer information. 
B. Emerging Financial Technology
The Division remains focused on registrants’ 
use of certain products and services, such as 
automated investment tools, AI technologies, and 
trading algorithms or platforms, and the risks 
associated with the use of emerging technologies 
and alternative sources of data. As such, the 
Division will, in particular, examine firms that 
engage in activities such as automated investment 
advisory services, recommendations, and related 
tools and methods. 
When conducting these reviews, assessments 
generally will include whether: (1) representations 
are fair and accurate; (2) operations and controls 

EXAMINATION PRIORITIES: FISCAL YEAR 2026    |  13
in place are consistent with disclosures made 
to investors; (3) algorithms lead to advice or 
recommendations consistent with investors’ 
investment profiles or stated strategies; 
and (4) controls to confirm that advice or 
recommendations resulting from automated tools 
are consistent with regulatory obligations to 
investors, including retail and older investors.
With respect to AI, the Division will focus on 
recent advancements in AI and will review for 
accuracy registrant representations regarding 
their AI capabilities or AI. The Division will 
assess whether firms have implemented adequate 
policies and procedures to monitor and/or 
supervise their use of AI technologies, including 
for tasks related to fraud prevention and 
detection, back-office operations, anti-money 
laundering (AML), and trading functions, as 
applicable. Reviews will also consider firm 
integration of regulatory technology to automate 
internal processes and optimize efficiencies.
C. Regulation Systems Compliance and 
Integrity (SCI)
As part of the Division’s examination of SCI 
entities, reviews will focus on:
• Policies and procedures related to incident 
response and how SCI entities review the 
effectiveness of these policies and procedures.
• SCI entities’ management of third-party vendor 
risk and properly identifying vendor systems that 
qualify as SCI systems or indirect SCI systems. 
D. Anti-Money Laundering
The Bank Secrecy Act (BSA) requires certain 
financial institutions, including broker-dealers 
and certain RICs, to establish AML programs. 
AML programs should be reasonably designed to 
prevent these financial institutions from being used 
for money laundering or the financing of terrorist 
activities and to achieve and monitor compliance 
with applicable BSA requirements. These programs 
should be tailored to address the risks associated 
with a firm’s location, size, and activities, including 
the customers they serve, the types of products 
and services offered, and how those products and 
services are offered. 
The Division will continue to focus on AML 
programs and review whether broker-dealers and 
certain RICs are: (1) appropriately tailoring and 
updating their AML program to their business 
model and associated AML risks, including 
accounting for risks associated with omnibus 
accounts maintained for foreign financial 
institutions; (2) adequately conducting independent 
testing; (3) establishing an adequate customer 
identification program, including for beneficial 
owners of legal entity customers; and (4) meeting 
their Suspicious Activity Report filing obligations. 
Examinations of certain RICs will also review 
policies and procedures for oversight of applicable 
financial intermediaries.
Lastly, the Division will review whether broker-
dealers, advisers, and RICs are monitoring the 
Department of the Treasury’s Office of Foreign 
Assets Control sanctions and ensuring compliance 
with such sanctions.

14    |  DIVISION OF EXAMINATIONS
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U .S . SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Examination Priorities
Fiscal Year 2026

Division of Examinations



DISCLAIMER: This statement represents the views of the staff of the Division of Examinations. It is not a 
rule, regulation, or statement of the U.S. Securities and Exchange Commission (SEC or Commission). The 
Commission has neither approved nor disapproved its content. This statement, like all staff statements, has no 
legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations 
for any person.



E X A M I N AT I O N  P R I O R I T I E S :  F I S C A L  Y E A R  2 0 2 6   |   iii

CONTENTS

MESSAGE FROM THE LEADERSHIP TEAM.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   1

DIVISION OF EXAMINATIONS: FISCAL YEAR 2026 EXAMINATION PRIORITIES.  .  .  .     5

I.	 Investment Advisers .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                    5

A.	 Adherence to Fiduciary Standards of Conduct .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                  5

B.	 Effectiveness of Advisers’ Compliance Programs.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                 6

C.	 Never-Examined Advisers and Recently Registered Advisers.  .  .  .  .  .  .  .  .  .         7

II.	 Investment Companies.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                  7

III.	 Broker-Dealers.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                       7

A.	 Broker-Dealer Financial Responsibility Rules.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                   7

B.	 Broker-Dealer Trading-Related Practices and Services.  .  .  .  .  .  .  .  .  .  .  .  .              8

C.	 Retail Sales Practice, Including Compliance with Regulation Best Interest.  . 8

IV.	 Self-Regulatory Organizations.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 9

A.	 National Securities Exchanges.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                            9

B.	 FINRA.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 9

C.	 Municipal Securities Rulemaking Board (MSRB).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                  9

V.	 Clearing Agencies .  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 9

VI.	 Other Market Participants .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                10

A.	 Municipal Advisors.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                  10

B.	 Transfer Agents.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                    10

C.	 Funding Portals.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                     11

D.	 Security-Based Swap Dealers (SBSDs).  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                       11

E.	 Security-Based Swap Execution Facilities (SBSEFs) .  .  .  .  .  .  .  .  .  .  .  .  .  .               11

VII.	Risk Areas Impacting Various Market Participants.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                   11

A.	 Information Security and Operational Resiliency.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 11

1.	 Cybersecurity.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 11

2.	 Regulation S-ID and Regulation S-P.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                       12

B.	 Emerging Financial Technology.  .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   12

C.	 Regulation Systems Compliance and Integrity (SCI) .  .  .  .  .  .  .  .  .  .  .  .  .  .               13

D.	 Anti-Money Laundering.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                13



iv  |   D I V I S I O N  O F  E X A M I N AT I O N S

Under the leadership of Chairman Atkins, 

we have reassessed how best to deploy our 

resources to meet growing responsibilities, as 

well as evolving risks shaped by developments in 

the U.S. capital markets and broader economic 

and geopolitical forces. 

—Division of Examinations Leadership Team   

“

”



E X A M I N AT I O N  P R I O R I T I E S :  F I S C A L  Y E A R  2 0 2 6   |   1

MESSAGE FROM THE 
LEADERSHIP TEAM

C hanges in the U.S. capital markets and at the SEC present new opportunities for growth, 
innovation and refinement of our approach to delivering on the Commission’s mission to protect 
investors, maintain fair and orderly capital markets, and facilitate capital formation. As the 
Division of Examinations (the Division) embarks on a new fiscal year, we remain grounded in 

advancing our Four Pillars to promote compliance, prevent fraud, inform policy, and monitor risk. At the 
same time, we continue to adapt to evolving market forces to ensure the Division’s mission is met. This new 
fiscal year marks an important time for the Division to build on our strengths, advance our mission with 
renewed focus, and ensure that our examination program continues to align with the Commission’s overall 
direction and the expectations of the investing public. 

The dedication of our talented staff continues to be the backbone of the Division. While operating with 
fewer resources, they have shown an unwavering commitment to serve as the “eyes and ears” of the 
Commission. Maintaining connections with registrants, investors and other market participants through 
their regular interactions, Division staff continue to provide invaluable insight into market trends, product 
developments, and shifting risks that inform the Commission. They carry out their responsibilities with focus 
and efficiency, ensuring that our risk-based examinations remain effective and responsive to the needs of 
investors and the marketplace. 

Under the leadership of Chairman Atkins, we have reassessed how best to deploy our resources to meet 
growing responsibilities, as well as evolving risks shaped by developments in the U.S. capital markets and 
broader economic and geopolitical forces. This involves reevaluating our risk-based priorities and how we 
approach various trends in the markets, new and emerging products and services, and our processes to 
ensure our examinations continue to be efficient and effective. Importantly, it also means exploring ways 
to empower registrants and investors alike by providing transparency of key examination observations; 
maintaining focused engagement through our national and regional outreach events; strengthening our 
partnership with the Divisions of Trading and Markets and Investment Management; and publishing Risk 
Alerts that highlight observed compliance approaches that registrants may consider in strengthening their 
compliance programs. Committed to continuous improvement, the Division’s leadership has advanced 
a series of strategic projects, including an operational effectiveness framework, to ensure increased 
consistency across examinations and deepen connectivity with our partners in other divisions and offices 
at the Commission. We believe these enhancements complement the structural evolution resulting from the 
reshaping of our workforce. 



2  |   D I V I S I O N  O F  E X A M I N AT I O N S

As has long been true, promoting compliance is an essential part of our four-pronged mission. Effectively 
delivering on this mission requires deliberate and active partnerships with compliance professionals who 
serve with us on the front lines of protecting investors. We recognize that market participants are navigating 
an increasingly complex and changing financial and regulatory environment. By sharing key observations 
from examinations, conducting focused engagements with industry and market participants, and publishing 
documents, such as our annual priorities, we strive to improve compliance in a way that that we believe is 
both transparent and practical. Although it is the registrants’ responsibilities to maintain their own robust 
compliance programs, we recognize the role the Division can play in supporting our shared interests in 
protecting investors and facilitating efficient capital formation. When effectively implemented, our efforts 
will support registrants, strengthen their ability to meet regulatory obligations and comply with federal 
securities laws. 

We accomplish our responsibility to inform policy primarily through collaboration and shared focus with 
Trading and Markets, Investment Management, and other divisions and offices at the SEC. We share our 
examination observations with other divisions and offices, providing firsthand, real-world insight that 
informs their understanding of market activity and practices, and ensuring that our collective efforts remain 
aligned and advances the broader mission of the Commission. Conversely, the policy divisions provide 
invaluable information, insights and support to the Division through legal interpretation, subject matter 
expertise and analytics, and training, among other activities. In that way, our priorities reflect a collaborative 
process that draws on engagement and ongoing dialogue across the agency, as well as insights from Division 
staff based on examinations and market observations. That collaboration is critical to the overall success of 
the agency in delivering its mission to the American people.



E X A M I N AT I O N  P R I O R I T I E S :  F I S C A L  Y E A R  2 0 2 6   |   3

Keith E. Cassidy
Director 

LEADERSHIP TEAM

Allison M. Fakhoury
National Clearance and 
Settlement Program 
Director

Marshall M. Gandy
National Investment 
Adviser/Investment 
Company Program Director

Kevin W. Goodman
National FINRA and 
Securities Industry 
Oversight Program Director

Alexis L. Hall
National Technology 
Controls Program  
Director

Vanessa L. Horton
National Investment 
Adviser/Investment 
Company Program Director

Michael G. Rufino
National Broker-Dealer 
and Exchange Program 
Director





E X A M I N AT I O N  P R I O R I T I E S :  F I S C A L  Y E A R  2 0 2 6   |   5

T he Division develops its examinations 
priorities in coordination and 
consultation with the other divisions 
and offices throughout the SEC 

and by considering, among other things, prior 
years’ examinations, market events, information 
gathered through participation in conferences and 
conversations with investors, registrants, industry 
groups, and other regulators. They reflect practices, 
products, and services that the Division believes 
present potentially heightened risks to investors 
or integrity to the U.S. capital markets. They are 
not the only areas the Division will address in 
examinations. The Division will devote resources to 
and cover other areas. The Division is continuously 
assessing these risks and discussing with its 
colleagues around the SEC how it can best support 
the SEC’s mission and priorities. Further, the 
Division’s priorities may shift in response to new 
or emerging risks, products and services, market 
events or investor concerns. 

The Division welcomes comments and suggestions 
regarding how it can better fulfill its mission to 
promote compliance, prevent fraud, identify and 
monitor risk, and inform SEC policy. Contact 
information is available at SEC.gov/exams. If you 
suspect or observe activity that may violate the 
federal securities laws or otherwise operate to 
harm investors, please notify the SEC at SEC.gov | 
Welcome to Tips, Complaints, and Referrals. 

I. INVESTMENT ADVISERS 

A. Adherence to Fiduciary Standards 
of Conduct 

Examining investment advisers’ (adviser) adherence 
to their duty of care and duty of loyalty obligations 
remains a priority for the Division, particularly 
with regard to aspects of their business that serve 
retail investors.

The Division will review investment advice 
and related disclosures provided to clients for 
consistency with their fiduciary obligations, such 
as: (1) the impact of advisers’ financial conflicts of 
interest on providing impartial advice; (2) advisers’ 
consideration of the various factors associated 
with their investment advice, such as generally the 
cost, investment product’s or strategy’s investment 
objectives, characteristics (including any special 
or unusual features), liquidity, risks and potential 
benefits, volatility, likely performance in a variety 
of market and economic conditions, time horizon, 
and cost of exit; and (3) advisers seeking best 
execution with the goal of maximizing value for 
their clients under the particular circumstances 
occurring at the time of the transaction. Moreover, 
the Division will focus on: 

•	 Investment products with the following 
strategies or characteristics: (1) alternative 
investments (e.g., private credit and private 
funds with investment lock-up for extended 

DIVISION OF EXAMINATIONS:  
FISCAL YEAR 2026  

EXAMINATION PRIORITIES

https://sec.gov/exams
https://www.sec.gov/welcome-tips-complaints-and-referrals
https://www.sec.gov/welcome-tips-complaints-and-referrals


6  |   D I V I S I O N  O F  E X A M I N AT I O N S

periods); (2) complex investments (e.g., 
exchange-traded funds (ETF) wrappers on 
less liquid underlying strategies, option-based 
ETFs, and leveraged and/or inverse ETFs); and 
(3) products that have higher costs associated 
with investing (e.g., high commissions and 
higher investment expenses than similar 
products/investments). 

•	 Investment recommendations for consistency 
with product disclosures and the clients’ 
investment objectives, risk tolerance, and 
financial/personal backgrounds, with emphasis 
on: (1) recommendations to older investors 
and those saving for retirement; (2) advisers to 
private funds that are also advising separately 
managed accounts and/or newly registered 
funds (e.g., reviewing for favoritism in 
investment allocations and interfund transfers); 
(3) advisers to newly launched private funds; 
(4) recommendations of certain products 
that may be particularly sensitive to market 
volatility; and (5) advisers that have not 
previously advised private funds (e.g., reviewing 
for regulatory awareness, liquidity, valuation, 
fees, disclosures, and differential treatment of 
investors, including use of side letters). 

In addition, the Division will focus on particular 
types of advisers and advisory services or business 
practices that may create additional risks and 
potential or actual conflicts of interest. Examples 
include: (1) advisers that are dually registered as 
broker-dealers, particularly where such advisers 
have advisory representatives who are also dually 
licensed as registered representatives and receive 
compensation or other financial incentives that may 
create conflicts of interest that must be addressed 
(e.g., account recommendations and allocations); 
(2) advisers utilizing third-parties to access clients’ 
accounts, where controls may be insufficient to 
protect client assets and data; and (3) advisers that 

have merged or consolidated with, or been acquired 
by, existing advisory practices, which may result 
in accompanying operational and/or compliance 
complexities or new conflicts of interest. 

B. Effectiveness of Advisers’ 
Compliance Programs

The Division’s assessment of the effectiveness of 
advisers’ compliance programs is a fundamental 
part of the examination process. Examinations 
focusing on this topic typically include an 
evaluation of the core areas of advisers’ compliance 
programs which include, as applicable and 
appropriate for each examination, marketing, 
valuation, trading, portfolio management, 
disclosure and filings, and custody. In addition, 
examinations on this topic typically include 
an analysis of advisers’ annual reviews of the 
effectiveness of their compliance programs. 

In reviewing advisers’ compliance policies and 
procedures, including those addressing advisers’ 
adherence to fiduciary principles, the Division 
continues to broadly focus on whether the 
policies and procedures address compliance with 
the Investment Advisers Act of 1940 and the 
rules thereunder and are reasonably designed to 
address conflicts of interest, in light of a firm’s 
particular operations, and to prevent advisers 
from placing their interests ahead of clients’ 
interests. Areas on which examinations may focus 
include: (1) whether the policies and procedures 
are implemented and enforced; and (2) whether 
disclosures address fee-related conflicts, with a 
focus on conflicts that arise from account and 
product compensations structures. 

The Division’s focus may also shift depending 
on an adviser’s practices or products, such as for 
advisers with activist engagement practices (e.g., 
whether they are making late or inaccurate filings 



E X A M I N AT I O N  P R I O R I T I E S :  F I S C A L  Y E A R  2 0 2 6   |   7

on Schedules 13D and 13G; and Form 13F; Forms 
3, 4, and 5; and Form N-PX). Examinations may 
also focus on compliance practices when advisers 
change their business models or are new to advising 
particular types of assets, clients, or services.

C. Never-Examined Advisers and Recently 
Registered Advisers

As with previous years, the Division will prioritize 
examinations of advisers that have never been 
examined, with particular emphasis on recently 
registered advisers. 

II. INVESTMENT COMPANIES

The Division continues to prioritize examinations 
of registered investment companies (RICs or funds), 
including mutual funds and ETFs, due to their 
importance to retail investors, particularly those 
saving for retirement. 

Examinations of RICs will generally include their 
compliance programs, disclosures, filings (e.g., 
summary prospectus) and governance practices. 
RIC operations of particular focus include: (1) fund 
fees and expenses, and any associated waivers and 
reimbursements; and (2) portfolio management 
practices and disclosures, for consistency with 
statements about investment strategies or 
approaches, with fund filings and marketing 
materials, and the amended fund “Names Rule”1 
(after the compliance date). 

1	 SEC, Final Rule: Investment Company Names, Release No. IC-35000 (Sept. 20, 2023) (broadening the scope of the 
requirement under the Investment Company Act of 1940 rule 35d-1 (the “Names Rule”) for certain funds to adopt a 
policy to invest at least 80 percent of the value of their assets in accordance with the investment focus the fund’s name 
suggests, and updating other names-related regulatory requirements, including by providing enhanced disclosure and 
reporting requirements related to terms used in fund names and by establishing additional recordkeeping requirements). 
See also SEC, Investment Company Names, Release No. IC-35500 (Mar. 14, 2025) (extending the compliance date for 
the Names Rule amendments from Dec. 11, 2025, to Jun. 11, 2026, for larger fund groups and from Jun. 11, 2026, to 
Dec. 11, 2026 for smaller fund groups).

The Division will also continue to monitor certain 
developing areas of interest. The following are 
examples of staff areas of interest: (1) RICs that 
participate in mergers or similar transactions, 
including any associated operational and 
compliance challenges; (2) certain RICs that use 
complex strategies and/or have significant holdings 
of less liquid or illiquid investments (e.g., closed end 
funds), including any associated issues regarding 
valuation and conflicts of interest; and (3) RICs 
with novel strategies or investments, including 
funds with leverage vulnerabilities.

As with adviser examinations, the Division will 
continue its prioritization of never-before-examined 
RICs, with particular emphasis on recently 
registered RICs to help empower and encourage 
RICs in building robust compliance programs. 

III. BROKER-DEALERS

A. Broker-Dealer Financial 
Responsibility Rules

Examinations will continue to focus on broker-
dealer compliance with the net capital rule, the 
customer protection rule and related internal 
processes, procedures, and controls. Areas of 
review will include the timeliness of financial 
notifications and other required filings. Reviews 
will focus on a firm’s operational resiliency 
programs, including supervision of third-party/
vendor-provided services that contribute to 
the records used to prepare financial reporting 
information and change management for 

https://www.sec.gov/files/rules/final/2023/33-11238.pdf
https://www.sec.gov/newsroom/press-releases/2025-54


8  |   D I V I S I O N  O F  E X A M I N AT I O N S

broker-dealers. Examiners will also assess 
broker-dealer credit, market, and liquidity risk 
management controls to determine whether 
firms have sufficient liquidity to manage stress 
events. Finally, examinations will evaluate cash 
sweep programs and prime brokerage activities, 
including issues of concentration, liquidity, and 
counterparty credit risks.

B. Broker-Dealer Trading-Related 
Practices and Services

A focus on broker-dealer equity and fixed income 
trading practices remains a Division priority. 
Areas of review will include broker-dealer trading 
practices associated with extended hours trading, 
and municipal securities, including the rates reset 
process on variable rate demand obligations, 
priority of orders, and mark-ups disclosure. The 
Division will also review broker-dealers’ routing 
and execution of orders. These reviews will include: 
(1) best execution; (2) the pricing and valuation of 
illiquid instruments such as variable rate demand 
obligations, other municipal securities, and 
non-traded REITs; and (3) disclosures regarding 
order routing and order execution information, 
including as required by Rule 605 under 
Regulation NMS.2

With respect to Regulation SHO, the Division will 
review whether broker-dealers are appropriately 
relying on the bona fide market making exception, 
including whether quoting activity is away from the 
inside bid/offer. Finally, the Division will examine 
alternative trading systems, including a focus on 
their compliance with the requirements to have 
written safeguards to protect subscriber confidential 
information under Rule 301(b)(1) under Regulation 
ATS, alignment with their descriptions in the Form 
ATS-N, disclosures, and risk controls.

2	 17 CFR 242.605.

C. Retail Sales Practice, Including 
Compliance with Regulation Best Interest

The Division will continue to examine broker-
dealer sales practices, including those related 
to Regulation Best Interest, and focus on the 
following areas of interest: (1) recommendations 
with regard to products and investment strategies 
(including account and rollover recommendations); 
(2) conflict identification and mitigation practices, 
in particular with respect to recommendations 
of accounts, rollovers, and recommendations 
involving limited product menus; (3) processes for 
reviewing reasonably available alternatives; and 
(4) processes for satisfying the Care Obligation, 
including consideration of particular factors in a 
customer’s investment profile and the product and 
account type characteristics considered.

In particular, examinations will focus on those 
recommended products that are complex or 
tax advantaged, such as variable and registered 
index-linked annuities; ETFs that invest in illiquid 
assets such as private equity or private credit; 
municipal securities, including 529 Plans; private 
placements; structured products; alternative 
investments; and other products that have complex 
fee structures or return calculations, are based 
on exotic benchmarks, are illiquid, or represent a 
growth area for retail investment. Examinations 
may also focus on recommendations: (1) that move 
an investment to a substantially similar product; 
(2) related to opening different account types such 
as option, margin, and self-directed IRA accounts; 
and (3) made to older investors and those saving 
for retirement or college. 

Examinations may also focus on dual registrants 
and encompass reviews of firms’ processes 
for identifying and mitigating and eliminating 
conflicts of interest where dual registrants receive 



E X A M I N AT I O N  P R I O R I T I E S :  F I S C A L  Y E A R  2 0 2 6   |   9

compensation or other financial incentives that may 
create conflicts of interest that must be addressed, 
account allocation practices (e.g., allocation of 
investments where an investor has more than one 
type of account) and account selection practices 
(e.g., brokerage versus advisory, including 
when rolling over employer plans to an IRA or 
transferring an existing brokerage account to an 
advisory account, as well as recommendations to 
open wrap fee accounts). Examinations may also 
assess broker-dealer supervision of sales practices at 
branch office locations.

The Division’s examinations will review the content 
of a broker-dealer’s relationship summary (Form 
CRS), such as how the broker-dealer describes: 
(1) the relationships and services that it offers 
to retail investors; (2) its fees and costs; (3) its 
conflicts of interest; and (4) whether the broker-
dealer accurately discloses its and its financial 
professionals’ disciplinary history.

IV. SELF-REGULATORY 
ORGANIZATIONS

A. National Securities Exchanges

The Division will examine the national securities 
exchanges to assess whether they are meeting 
their obligations to enforce compliance with 
self-regulatory organization rules and the federal 
securities laws. Examinations may focus on 
regulatory programs and participation in National 
Market System Plans.

B. FINRA

FINRA, among other things, promulgates rules 
that govern its members, provides a forum for 
securities arbitration and mediation, conducts 
market regulation, including by contract for the 
national securities exchanges, reviews broker-

dealer advertisements, administers the testing 
and licensing of registered persons, and operates 
industry utilities, such as Trade Reporting Facilities.

The Division conducts risk-based oversight 
examinations of FINRA. It selects areas within 
FINRA to examine through a risk assessment 
process designed to identify those aspects of 
FINRA’s operations important to the protection of 
investors and market integrity, including FINRA’s 
implementation of investor protection initiatives 
such as Regulation Best Interest and Form 
CRS. The assessment is informed by collecting 
and analyzing extensive information and data, 
regular meetings with key functional areas within 
FINRA, and outreach to various stakeholders, 
including investor and industry groups. Based on 
the outcome of this risk assessment process, the 
Division conducts inspections of FINRA’s major 
regulatory programs. The Division also conducts 
oversight examinations of FINRA’s examinations 
of certain broker-dealers and municipal advisors 
that are FINRA members. From its observations 
during all of these inspections and examinations, 
the Division makes detailed recommendations to 
improve FINRA’s programs, its risk assessment 
processes, and its future examinations.

C. Municipal Securities Rulemaking 
Board (MSRB)

The Division also applies a risk assessment process, 
similar to the one it uses to oversee FINRA, to 
identify areas to examine at the MSRB. 

V. CLEARING AGENCIES 

Title VIII of the Dodd-Frank Act requires the 
Commission to examine, at least once annually, 
each clearing agency designated as systemically 
important and for which the Commission serves 



10  |   D I V I S I O N  O F  E X A M I N AT I O N S

as the supervisory agency. These examinations will 
focus on clearing agencies’ core risks, processes, 
and controls, and will cover the specific areas 
required by statute, including the nature of clearing 
agencies’ operations and assessment of financial 
and operational risk. 

Additionally, the Division will conduct risk-based 
examinations of other registered clearing agencies 
that have not been designated by statute as 
systemically important. The Division will examine 
for compliance with the Commission’s Standards 
for Covered Clearing Agencies, which are rules 
requiring policies and procedures that address core 
risk-management functions, including maintaining 
sufficient financial resources, protecting against 
credit risks, managing member defaults, and 
mitigating operational risk. 

Examinations of registered clearing agencies 
include both risk-based examinations and 
corrective action reviews, and are undertaken to 
assess: (1) whether the clearing agencies’ respective 
risk management frameworks comply with the 
Securities Exchange Act of 1934 (Exchange Act) 
and serve the needs of their members and the 
markets they serve; (2) the adequacy and timeliness 
of their remediation of prior deficiencies, including, 
for example, the role of senior leadership in the 
remediation process; and (3) other risk areas 
identified in collaboration with other Commission 
divisions and offices and other regulators. In 
addition, the Division examines security-based 
swap data repositories and entities operating 
pursuant to a Commission order exempting them 
from the clearing agency registration requirement 
under Section 17A(b)(1) of the Exchange Act. 
Areas of examination focus across registrant 
types may include risk management of liquidity, 

default management, recovery and wind-down, 
collateral management, operations, and operational 
arrangements with other clearing agencies, among 
other things. 

VI. OTHER MARKET PARTICIPANTS

A. Municipal Advisors

The Division will continue to examine whether 
municipal advisors have met their fiduciary duty to 
municipal entity clients when engaging in municipal 
advisory activities such as providing advice or 
recommendations regarding the pricing or method 
of sale of municipal securities (e.g., recommending 
a competitive versus negotiated sale). The Division 
will also continue to examine whether municipal 
advisors have complied with MSRB Rule G-42, 
which establishes the core standards of conduct 
and duties applicable to non-solicitor municipal 
advisors, including requirements to disclose 
conflicts of interest and to document municipal 
advisory relationships. Finally, the Division will 
continue to assess whether municipal advisors have 
made required filings with the Commission and 
met their professional qualification, registration, 
recordkeeping, and supervision requirements.

B. Transfer Agents

The Division will continue to examine transfer agent 
processing of items and transfers, recordkeeping 
and record retention, safeguarding of funds and 
securities, and filings with the Commission. 
Examinations will also focus on transfer agents 
that use emerging technology to perform their 
transfer agent functions. After the compliance 
date, the Division will also examine transfer agents 
for compliance with the 2024 amendments to 
Regulation S-P, including the safeguards rule, the 



E X A M I N AT I O N  P R I O R I T I E S :  F I S C A L  Y E A R  2 0 2 6   |   11

disposal rule, and the requirement to establish 
incident response programs.3

C. Funding Portals

The Division will focus on funding portal 
arrangements with qualified third-parties 
regarding the maintenance and transmission of 
investor funds and examine whether funding 
portals are making and preserving required 
records. In addition, the Division will review 
funding portals’ written policies and procedures 
to assess if they are reasonably designed to 
achieve compliance with applicable federal 
securities laws and rules relating to its business 
as a funding portal. After the compliance date, 
the Division may also examine funding portals 
for compliance with the 2024 amendments to 
Regulation S-P, including the safeguards rule, the 
disposal rule, and the requirement to establish 
incident response programs. 

D. Security-Based Swap Dealers (SBSDs)

The Division will continue to focus its 
examinations on whether SBSDs are complying 
with their obligations under Regulation SBSR to 
accurately report security-based swap transactions 
to security-based swap data repositories. As stated 
in the Division’s Risk Alert,4 accurate and complete 
security-based swap reporting that the investing 
public and the Commission can rely upon is crucial 

3	 SEC, Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information, Exchange 
Act Release No. 100155 (May 16, 2024). (Adopting amendments to Regulation S-P that apply to broker-dealers, 
funding portals, investment companies, SEC-registered investment advisers, and transfer agents registered with the 
SEC or another appropriate regulatory agency (collectively, “covered institutions”) and are designed to modernize and 
enhance the protection of consumer financial information by: (1) requiring covered institutions to develop, implement, 
and maintain written policies and procedures for an incident response program that is reasonably designed to detect, 
respond to, and recover from unauthorized access to or use of customer information; (2) requiring that the response 
program include procedures for covered institutions to provide timely notification to affected individuals whose 
sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization; and 
(3) broadening the scope of information covered by Regulation S-P’s requirements).

4	 SEC, Risk Alert: Observations Related to Security-Based Swap Dealers (Jan. 10, 2024). 

for the regulation and transparency of the security-
based swap markets. The Division also expects to 
focus on SBSDs’ risk management practices and 
compliance with capital, margin and segregation 
requirements. Finally, the Division continues to 
assess whether SBSDs have taken corrective action 
to address issues identified in prior examinations. 

E. Security-Based Swap Execution 
Facilities (SBSEFs) 

The Division expects to begin conducting 
examinations of registered SBSEFs focusing on 
the SBSEF’s rules and related internal policies 
and procedures addressing trade monitoring, 
trade processing, and participation. Moreover, 
the Division plans to assess how SBSEFs establish 
programs of risk analysis and oversight to identify 
and minimize sources of operational risk.

VII. RISK AREAS IMPACTING VARIOUS 
MARKET PARTICIPANTS

A. Information Security and Operational 
Resiliency

1. Cybersecurity
The Division will continue to review registrant 
practices to prevent interruptions to mission-critical 
services and to protect investor information, 
records, and assets. Operational disruption 
risks remain elevated due to the proliferation of 
cybersecurity attacks, firms’ dispersed operations, 

https://www.sec.gov/files/rules/final/2024/34-100155.pdf
https://www.sec.gov/files/risk-alert-sbsd-011023.pdf


12  |   D I V I S I O N  O F  E X A M I N AT I O N S

weather-related events, and geopolitical concerns. 
The Division will also examine registrants’ 
procedures and practices to assess whether they 
are reasonably managing information security and 
operational risks. 

A perennial examination priority, the Division’s 
focus on cybersecurity practices by registrants 
remains vital to help ensure the safeguarding of 
customer records and information. Particular 
attention will be on firms’ policies and procedures 
pertaining to governance practices, data loss 
prevention, access controls, account management, 
and responses and recovery to cyber-related 
incidents, including those related to ransomware 
attacks. In addition, focus will be on training 
and security controls that firms are employing to 
identify and mitigate new risks associated with 
artificial intelligence (AI) and polymorphic malware 
attacks, including how they are operationalizing 
information from threat intelligence sources. 

Lastly, the Division will review firms’ operational 
resiliency.

2. Regulation S-ID and Regulation S-P
The Division will assess compliance with 
Regulations S-ID and S-P, as applicable. 
Examinations will focus on firms’ policies 
and procedures, internal controls, oversight of 
third-party vendors, and governance practices. 
Regarding Regulation S-ID, the Division will 
focus on firms’ development and implementation 
of a written Identity Theft Prevention Program 
(Program) that is designed to detect, prevent, and 
mitigate identity theft in connection with covered 
accounts. Specifically, the Division will assess the 
reasonableness of firms’ policies and procedures 

5	 SEC, Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information, Advisers Act 
Rel. No. 6604 (May 16, 2024). 

included within their Programs, including 
whether they: 

•	 Are reasonably designed to identify and detect 
red flags, particularly during customer account 
takeovers and fraudulent transfers; and 

•	 Include firm training on identity theft prevention. 

In preparation for the compliance dates for the 
Commission’s amendments to Regulation S-P,5 the 
Division will engage firms during examinations 
about their progress in preparing incident response 
programs reasonably designed to detect, respond 
to, and recover from unauthorized access to or 
use of customer information. After the applicable 
compliance dates, the Division will examine 
whether firms have developed, implemented, and 
maintained policies and procedures in accordance 
with the rule’s new provisions that address 
administrative, technical, and physical safeguards 
for the protection of customer information. 

B. Emerging Financial Technology

The Division remains focused on registrants’ 
use of certain products and services, such as 
automated investment tools, AI technologies, and 
trading algorithms or platforms, and the risks 
associated with the use of emerging technologies 
and alternative sources of data. As such, the 
Division will, in particular, examine firms that 
engage in activities such as automated investment 
advisory services, recommendations, and related 
tools and methods. 

When conducting these reviews, assessments 
generally will include whether: (1) representations 
are fair and accurate; (2) operations and controls 

https://www.sec.gov/files/rules/final/2024/34-100155a.pdf


E X A M I N AT I O N  P R I O R I T I E S :  F I S C A L  Y E A R  2 0 2 6   |   13

in place are consistent with disclosures made 
to investors; (3) algorithms lead to advice or 
recommendations consistent with investors’ 
investment profiles or stated strategies; 
and (4) controls to confirm that advice or 
recommendations resulting from automated tools 
are consistent with regulatory obligations to 
investors, including retail and older investors.

With respect to AI, the Division will focus on 
recent advancements in AI and will review for 
accuracy registrant representations regarding 
their AI capabilities or AI. The Division will 
assess whether firms have implemented adequate 
policies and procedures to monitor and/or 
supervise their use of AI technologies, including 
for tasks related to fraud prevention and 
detection, back-office operations, anti-money 
laundering (AML), and trading functions, as 
applicable. Reviews will also consider firm 
integration of regulatory technology to automate 
internal processes and optimize efficiencies.

C. Regulation Systems Compliance and 
Integrity (SCI)

As part of the Division’s examination of SCI 
entities, reviews will focus on:

•	 Policies and procedures related to incident 
response and how SCI entities review the 
effectiveness of these policies and procedures.

•	 SCI entities’ management of third-party vendor 
risk and properly identifying vendor systems that 
qualify as SCI systems or indirect SCI systems. 

D. Anti-Money Laundering

The Bank Secrecy Act (BSA) requires certain 
financial institutions, including broker-dealers 
and certain RICs, to establish AML programs. 
AML programs should be reasonably designed to 
prevent these financial institutions from being used 
for money laundering or the financing of terrorist 
activities and to achieve and monitor compliance 
with applicable BSA requirements. These programs 
should be tailored to address the risks associated 
with a firm’s location, size, and activities, including 
the customers they serve, the types of products 
and services offered, and how those products and 
services are offered. 

The Division will continue to focus on AML 
programs and review whether broker-dealers and 
certain RICs are: (1) appropriately tailoring and 
updating their AML program to their business 
model and associated AML risks, including 
accounting for risks associated with omnibus 
accounts maintained for foreign financial 
institutions; (2) adequately conducting independent 
testing; (3) establishing an adequate customer 
identification program, including for beneficial 
owners of legal entity customers; and (4) meeting 
their Suspicious Activity Report filing obligations. 
Examinations of certain RICs will also review 
policies and procedures for oversight of applicable 
financial intermediaries.

Lastly, the Division will review whether broker-
dealers, advisers, and RICs are monitoring the 
Department of the Treasury’s Office of Foreign 
Assets Control sanctions and ensuring compliance 
with such sanctions.



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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


	Message from the Leadership Team
	Division of Examinations: Fiscal Year 2026 Examination Priorities
	I. Investment Advisers 
	A. Adherence to Fiduciary Standards of Conduct 
	B. Effectiveness of Advisers’ Compliance Programs
	C. Never-Examined Advisers and Recently Registered Advisers

	II. Investment Companies
	III. Broker-Dealers
	A. Broker-Dealer Financial Responsibility Rules
	B. Broker-Dealer Trading-Related Practices and Services
	C. Retail Sales Practice, Including Compliance with Regulation Best Interest

	IV. Self-Regulatory Organizations
	A.	National Securities Exchanges
	B. FINRA
	C. Municipal Securities Rulemaking Board (MSRB)

	V. Clearing Agencies 
	VI. Other Market Participants
	A. Municipal Advisors
	B. Transfer Agents
	C. Funding Portals
	D. Security-Based Swap Dealers (SBSDs)
	E. Security-Based Swap Execution Facilities (SBSEFs) 

	VII. Risk Areas Impacting Various Market Participants
	A. Information Security and Operational Resiliency
	1. Cybersecurity
	2. Regulation S-ID and Regulation S-P

	B. Emerging Financial Technology
	C. Regulation Systems Compliance and Integrity (SCI)
	D.	Anti-Money Laundering