2024

EXAMINATION PRIORITIES

Division of Examinations

U.S. Securities and 

Exchange Commission

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.

CONTENTS

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

DIVISION OF EXAMINATIONS – FISCAL YEAR 2024 EXAMINATION PRIORITIES.....................................5

I. Investment Advisers ......................................................................................................................................7

A. Examinations of Investment Advisers ..............................................................................................7

B. Examinations of Investment Advisers to Private Funds..........................................................10

II. Investment Companies ................................................................................................................................11

III. Broker-Dealers ...............................................................................................................................................13

A. Regulation Best Interest.......................................................................................................................13

B. Form CRS...................................................................................................................................................14

C. Broker-Dealer Financial Responsibility Rules..............................................................................14

D. Broker-Dealer Trading Practices.......................................................................................................14

IV. Self-Regulatory Organizations.................................................................................................................15

A. National Securities Exchanges ..........................................................................................................15

B. Financial Industry Regulatory Authority .......................................................................................15

C. Municipal Securities Rulemaking Board ........................................................................................16

V. Clearing Agencies.........................................................................................................................................16

VI. Other Market Participants .........................................................................................................................17

A. Municipal Advisors .................................................................................................................................17

B. Security-Based Swap Dealers............................................................................................................18

C. Transfer Agents .......................................................................................................................................18

VII. Risk Areas Impacting Various Market Participants..........................................................................18

A. Information Security and Operational Resiliency ......................................................................18

B. Crypto Assets and Emerging Financial Technology.................................................................19

C. Regulation Systems Compliance and Integrity..........................................................................20

D. Anti-Money Laundering.........................................................................................................................21

VIII. Conclusion ...................................................................................................................................................... 22

2024 EXAMINATION PRIORITIES | 1

MESSAGE FROM THE LEADERSHIP TEAM

In the more than ten years since the publication of the Division of Examinations’ (Division) 

first annual examination priorities, there has been a dramatic growth in, and increased 

complexity of, the U.S. capital markets and its participants. At the same time, we have 

seen financial products and technological tools offered to investors continue to evolve at 

greater speed. Despite these exponential changes, the Division has remained resilient and 

endeavored to keep pace with risks in the marketplace. As the speed of this transformation 

in the markets continues to accelerate, the Division continues to evolve how we conduct 

examinations and engage with market participants. 

With over 1,100 staff members spread across eleven regional offices and in Washington, DC, 

Division staff are engaged with market participants through examinations and proactive 

outreach continuously throughout the year. These interactions form a critical connection 

between the U.S. Securities and Exchange Commission (SEC or Commission) and the 

capital markets, giving Division staff and staff across the agency a ground level view of 

developments in the financial industry. Guided by the Division’s “four pillar” mission – to 

promote compliance, prevent fraud, monitor risk and inform policy – our experienced 

and talented staff gain a unique perspective of the industry and risks in the markets which 

informs both what we do as a Division and the Commission more broadly.

We are pleased to provide you with the examination priorities for fiscal year 2024. This 

year, for the first time, we are aligning the publication of our priorities with the start of the 

fiscal year with the hope that it will better inform investors and registrants of the key risks, 

trends, and examination topics that we plan to focus on in the upcoming year. This step, 

along with focused engagement with the industry and investors through our national and 

regional outreach events and a greater presence of our examiners in the field, are just a few 

examples of our intention to provide more transparency and to continue to move forward 

together with investors and the industry to promote compliance.

A LOOKBACK AT FISCAL YEAR 2023

As part of our commitment to fulfilling our “four pillars,” Division staff carried out critical 

work over the last twelve months through focused and targeted examinations and outreach, 

fostered compliance through proactive engagements with the industry, and uncovered 

fraudulent conduct through our risk-based examination process. Completion of these 

examinations has been no simple task, and the high quality and efficiency in which they 

were conducted is a testament to the hard work of a committed and focused staff with a 

mission to serve investors. 
2 | U.S. SECURITIES AND EXCHANGE COMMISSION

In the three years since the beginning of the pandemic, we have continued to transform how 

we carry out examinations and communicate observations and other important information 

to market participants. With the nationwide return to the office earlier this year, we have been 

proactive in utilizing what we have learned over the past three years to enhance how we work 

and communicate with market participants, while incorporating many of the efficiencies into 

our processes. Division staff have also continued to conduct more in-person fieldwork, and 

in many instances, provided virtual options to both examiners and registrants to participate 

in different stages of an examination to broaden access. We have also sought to actively 

manage the process of identifying the need for and publication of risk alerts that summarize 

examination observations as well as preview to registrants potential examination scope areas 

focusing on compliance with new rules. 

Last fiscal year, the Division published nine risk alerts providing observations that touch on 

a diverse cross-section of examination topics, including observations related to: (i) compliance 

with Regulation S-ID and firms’ development and implementation of an identity theft 

prevention program; (ii) broker-dealer compliance related to Regulation Best Interest; 

(iii) issues identified in recent newly-registered investment adviser examinations; (iv) issues 

concerning LIBOR-transition preparedness by investment advisers and investment companies; 

and (v) compliance with anti-money laundering regulation. We also used our risk alerts to 

highlight areas that certain examinations might cover, such as highlighting staff’s focus on 

different aspects of the Marketing Rule under the Advisers Act. 

In fiscal year 2023, we also continued our robust engagement with investors, investor groups, 

industry, and regulatory partners, by participating both virtually and in-person, in various 

speaking engagements and national and regional compliance events. Notably, the Division 

held its semi-annual National Compliance Outreach seminar virtually in November 2022, 

further extending the impact and reach of the event. Over 10,000 compliance and industry 

professionals attended the event, which included discussions of a variety of key topics for 

senior officers of registered investment advisers and investment companies. We also continued 

to coordinate and share experiences and information with other federal and state regulators, 

as well as with self-regulatory organizations. The Division also launched a series of joint 

regulatory trainings with FINRA staff to enhance communication and collaboration between 

both regulators related to our respective examination programs. By collaborating with one 

another through these trainings, our aim was not only to enhance communication between 

Division and FINRA staff, but also to learn about one another’s examination methodology, 
2024 EXAMINATION PRIORITIES | 3

and how both organizations protect investors, ensure compliance, and preserve market 

integrity. Our regional offices also took the lead in developing and organizing several 

compliance focused events by collaborating with other regulators, as well as industry and 

professional associations within their respective regions.

Although fiscal year 2023 continued to place greater demands on the Division’s resources, 

we strived for more efficiency and effectiveness in carrying out our examinations 

while being responsible and nimble. Last year, the Division implemented a number of 

internal changes to align our resources to developments in the markets and the evolving 

regulatory landscape. For instance, we centralized the monitoring and data function for 

security-based swaps into the Office of Security Based Swaps within the Broker-Dealer 

Exchange Program. We also established specialized teams within our different examination 

programs, allowing us to better address emerging issues and risks associated with crypto 

assets, financial technology, such as artificial intelligence, and cybersecurity, among others. 

Finally, we continued to strengthen our leadership team by bringing onboard a number of 

key senior and advisory positions and building additional capacity in various examination 

programs to keep pace with the rapidly developing market ecosystem consistent with 

Congress’ fiscal year 2023 appropriation. 

CONTINUING TO MOVE FORWARD TOGETHER

The theme of evolving with the markets and remaining flexible in the ever-changing 

markets also carries over to our engagement with registered firms, investors, and the 

industry. More specifically, we acknowledge that changes in the regulatory landscape 

will impact many registrants and other market participants. As the industry prepares to 

meet new regulatory requirements, similarly, the Division will need to consider the impact 

of these rules, which will influence potential examinations, compliance risks and new focus 

areas. To support the industry, we expect to increase our engagement through increased 

in-person fieldwork, compliance outreach events, speaking engagements, among other 

touchpoints. 

Since the publication of our fiscal year 2023 priorities approximately eight months ago, 

we have advanced our mission as reflected in this year’s priorities, which provide both 

continuity and change to reflect a fluid and evolving economic and regulatory landscape. 

Given the shorter interval in between the publication of our priorities, several initiatives 

and focus areas from last year remain as fiscal year 2024 priorities. 
4 | U.S. SECURITIES AND EXCHANGE COMMISSION

FINAL NOTES 

As we look ahead this fiscal year, the Division will build upon our past accomplishments 

and efforts, strive to do more, and continue to adapt to the ever-changing markets. 

Continuing to use our “four pillars” as our foundation, we will remain both resilient 

and willing to adjust our priorities as the U.S. capital markets and market participants, 

as well as products they offer, continue to rapidly evolve. In doing so, we hope to 

increase the level of transparency across the range of activities in which we are engaged. 

We remain energized and determined to take on more challenges and make this year even 

more successful.

Richard R. Best

Director

Marshall M. Gandy

National Investment 

Adviser/Investment 

Company Program 

Director

Natasha Vij Greiner

Deputy Director and 

National Investment 

Adviser/Investment 

Company Program 

Director

Kevin W. Goodman

National FINRA and 

Securities Industry 

Oversight Program 

Director

Keith E. Cassidy

Deputy Director and 

National Technology 

Controls Program 

Director

Michael G. Rufino

National BrokerDealer and Exchange 

Program Director

Allison M. Fakhoury

National Clearance 

and Settlement 

Program Director
2024

EXAMINATION 

PRIORITIES

Division of Examinations

2024 EXAMINATION PRIORITIES | 7

FISCAL YEAR 2024 EXAMINATION PRIORITIES

The Division of Examinations (Division) prioritizes examinations of certain practices, 

products, and services that it believes present potentially heightened risks to investors 

or the integrity of the U.S. capital markets. This year’s examinations will prioritize areas 

that pose emerging risks to investors or the markets, as well as examinations of core and 

perennial risk areas.

I. INVESTMENT ADVISERS 

A. Examinations of Investment Advisers

As a fiduciary, an investment adviser owes a duty of care and a duty of loyalty to 

its clients. An adviser must, at all times, serve the best interest of its clients and not 

subordinate its clients’ interest to its own. In other words, an investment adviser cannot 

place its own interests ahead of the interests of its clients. In addition, an adviser is 

required to eliminate or make full and fair disclosure of all conflicts of interest which 

might incline the adviser—consciously or unconsciously—to render advice which is not 

disinterested such that a client can provide informed consent to the conflict. Examining for 

advisers’ adherence to their duty of care and duty of loyalty obligations remains a priority 

for the Division. In reviewing advisers’ adherence to this fiduciary standard, the Division 

continues to focus on:

• Investment advice provided to clients with regard to products, investment strategies, 

and account types, particularly those regarding: (1) complex products, such as 

derivatives and leveraged exchange-traded funds (ETFs); (2) high cost and illiquid 

products, such as variable annuities and non-traded real estate investment trusts 

(REITs); and (3) unconventional strategies, including those that purport to address 

rising interest rates. Examination focus may be emphasized for investment advice 

provided to certain types of clients, such as older investors and those saving for 

retirement. 

• Processes for determining that investment advice is provided in clients’ best 

interest, including those processes for (1) making initial and ongoing suitability 

determinations, (2) seeking best execution, (3) evaluating costs and risks, and 

(4) identifying and addressing conflicts of interest. Such assessments will also 

review the factors advisers consider in light of the clients’ investment profiles, 

including investment goals and account characteristics. Examinations will review 
8 | U.S. SECURITIES AND EXCHANGE COMMISSION

how advisers address conflicts of interest, including (1) mitigating or eliminating 

the conflicts of interest, when appropriate, and (2) allocating investments to 

accounts where investors have more than one account (e.g., allocating between 

accounts that are adviser fee-based, brokerage commission-based, and wrap fee, 

as well as between taxable and non-taxable accounts). 

• Economic incentives that an adviser and its financial professionals may have to 

recommend products, services, or account types, such as the source and structure 

of compensation, revenue, or other benefits. Such economic incentives may exist 

when there is revenue sharing, markups, or other incentivizing revenue arrangements. 

Examinations will focus on the economic incentives and conflicts of interest 

associated with advisers that are dually registered as broker-dealers, use affiliated firms 

to perform client services, and have financial professionals servicing both brokerage 

customers and advisory clients to identify, among other things: (1) investment advice 

to purchase or hold onto certain types of investments (e.g., mutual fund share classes) 

or invest through certain types of accounts when lower cost options are available; and 

(2) investment advice regarding proprietary products and affiliated service providers 

that result in additional or higher fees to investors. 

• Disclosures made to investors and whether they include all material facts relating 

to conflicts of interest associated with the investment advice sufficient to allow a client 

to provide informed consent to the conflict. 

The Division remains focused on advisers’ compliance programs, including whether their 

policies and procedures reflect the various aspects of the advisers’ business, compensation 

structure, services, client base, and operations, and address applicable current market risks. 

The Division’s review of advisers’ annual reviews of the effectiveness of their compliance 

programs is an important part of assessing whether the 

advisers’ conflicts of interests are addressed in the advisers’ 

compliance programs, including those conflicts created by 

the advisers’ business arrangements or affiliations and 

related to adviser and registered investment company fees 

and expenses. 

The examination focus on compliance policies and 

procedures may include one or more of the following 

areas, as discussed in the adopting release for the 

compliance rule (Compliance Rule) under the Investment 

The Division remains focused on 

advisers’ compliance programs, 

including whether their policies and 

procedures reflect the various aspects 

of the advisers’ business, compensation 

structure, services, client base, and 

operations, and address applicable 

current market risks.
2024 EXAMINATION PRIORITIES | 9

Advisers Act of 1940 (Advisers Act):1 (1) portfolio management processes; (2) disclosures 

made to investors and regulators; (3) proprietary trading by the adviser and the personal 

trading activities of supervised advisory personnel; (4) safeguarding of client assets from 

conversion or inappropriate use by advisory personnel; (5) the accurate creation of 

required records and their maintenance in a manner that secures them from unauthorized 

alteration or use and protects them from untimely destruction; (6) safeguards for the 

privacy protection of client records and information; (7) trading practices; (8) marketing 

advisory services; (9) processes to value client holdings and assess fees based on those 

valuations; and (10) business continuity plans. Compliance program reviews will also 

assess whether the policies and procedures are sufficient to support compliance with 

advisers’ fiduciary obligations. 

Particular examination focus will include: 

• Marketing practice assessments for whether advisers, including advisers to private 

funds, have: (1) adopted and implemented reasonably designed written policies 

and procedures to prevent violations of the Advisers Act and the rules thereunder 

including reforms to the Marketing Rule; (2) appropriately disclosed their marketingrelated information on Form ADV; and (3) maintained substantiation of their 

processes and other required books and records. Marketing practice reviews will 

also assess whether disseminated advertisements include any untrue statements of a 

material fact, are materially misleading, or are otherwise deceptive and, as applicable, 

comply with the requirements for performance (including hypothetical and 

predecessor performance), third-party ratings, and testimonials and endorsements. 

• Compensation arrangement assessments focusing on: (1) fiduciary obligations of 

advisers to their clients, including registered investment companies, particularly 

with respect to the advisers’ receipt of compensation for services or other material 

payments made by clients and others; (2) alternative ways that advisers try to 

maximize revenue, such as revenue earned on clients’ bank deposit sweep programs; 

and (3) fee breakpoint calculation processes, particularly when fee billing systems are 

not automated.

• Valuation assessments regarding advisers’ recommendations to clients to invest 

in illiquid or difficult to value assets, such as commercial real-estate or private 

placements.

1 Advisers Act Rule 206(4)-7. See also SEC, Final Rule: Compliance Programs of Investment Companies 

and Investment Advisers, IA-2204 (Dec. 17, 2003).
10 | U.S. SECURITIES AND EXCHANGE COMMISSION

• Safeguarding assessments for advisers’ controls to protect clients’ material non-public 

information, particularly when multiple advisers share office locations, have 

significant turnover of investment adviser representatives, or use expert networks.

• Disclosure assessments to review the accuracy and completeness of regulatory filings, 

including Form CRS, with a particular focus on inadequate or misleading disclosures 

and registration eligibility. 

The Division is also focused on advisers’ policies and procedures for: (1) selecting and 

using third-party and affiliated service providers; (2) overseeing branch offices when 

advisers operate from numerous or geographically dispersed offices; and (3) obtaining 

informed consent from clients when advisers implement material changes to their advisory 

agreements. Such reviews will assess, among other things, whether the advisers’ policies 

and procedures are reasonably designed and implemented and whether the procedures 

prevent the advisers from placing their interests ahead of clients’ interests. 

As with previous years, the Division continues to prioritize examinations of advisers that 

have never been examined, including recently registered advisers, and those that have not 

been examined for a number of years. 

B. Examinations of Investment Advisers to Private Funds 

Advisers to private funds remain a significant portion of the SEC-registered investment 

adviser population. The Division will continue to focus on advisers to private funds and 

prioritize specific topics, such as:

• The portfolio management risks present when there is exposure to recent market 

volatility and higher interest rates. This may include private funds experiencing poor 

performance, significant withdrawals and valuation issues and private funds with 

more leverage and illiquid assets.

• Adherence to contractual requirements regarding limited partnership advisory 

committees or similar structures (e.g., advisory boards), including adhering to any 

contractual notification and consent processes.

• Accurate calculation and allocation of private fund fees and expenses (both 

fund-level and investment-level), including valuation of illiquid assets, calculation of 

post commitment period management fees, adequacy of disclosures, and potential 

offsetting of such fees and expenses.
2024 EXAMINATION PRIORITIES | 11

• Due diligence practices for consistency with policies, procedures, and disclosures, 

particularly with respect to private equity and venture capital fund assessments of 

prospective portfolio companies.

• Conflicts, controls, and disclosures regarding private funds managed side-by-side with 

registered investment companies and use of affiliated service providers.

• Compliance with Advisers Act requirements regarding custody, including accurate 

Form ADV reporting, timely completion of private fund audits by a qualified auditor 

and the distribution of private fund audited financial statements.

• Policies and procedures for reporting on Form PF, including upon the occurrence of 

certain reporting events.

II. INVESTMENT COMPANIES 

The Division continues to prioritize examinations of registered investment companies, 

including mutual funds and ETFs, due to their importance to retail investors, particularly 

those saving for retirement.

Examinations of registered investment companies often include assessing, among other 

things, their compliance programs and fund governance practices, disclosures to investors, 

and accuracy of reporting to the SEC. In assessing registered investment companies’ 

compliance programs and governance practices, the Division will review boards’ processes 

for assessing and approving advisory and other fund fees, 

particularly for funds with weaker performance relative to their 

peers. In addition, the Division will review registered investment 

company valuation practices, particularly for those addressing 

fair valuation practices (e.g., implementing board oversight 

duties, setting recordkeeping and reporting requirements, and 

overseeing valuation designees), and, as applicable, will assess the 

effectiveness of registered investment companies’ derivatives risk 

management and liquidity risk management programs. 

The Division continues to 

prioritize examinations of 

registered investment companies, 

including mutual funds and ETFs, 

due to their importance to retail 

investors, particularly those 

saving for retirement.
12 | U.S. SECURITIES AND EXCHANGE COMMISSION

Examination focus areas may include:

• Fees and expenses and reviewing whether registered investment companies have 

adopted effective written compliance policies and procedures concerning the 

oversight of advisory fees and implemented any associated fee waivers and 

reimbursements. A particular focus will be on: (1) charging different advisory 

fees to different share classes of the same fund; (2) identical strategies offered by 

the same sponsor through different distribution channels but that charge differing 

fee structures; (3) high advisory fees relative to peers; and (4) high registered 

investment company fees and expenses, particularly those of registered investment 

companies with weaker performance relative to their peers. Examinations will also 

review the boards’ approval of the advisory contract and registered investment 

company fees.

• Derivatives risk management assessments to review whether registered investment 

companies as well as business development companies have adopted and 

implemented written policies and procedures reasonably designed to prevent 

violations of the Commission’s fund derivatives rule (Investment Company Act Rule 

18f-4). Review of compliance with the derivatives rule may include review of the 

adoption and implementation of a derivatives risk management program, board 

oversight, and whether disclosures concerning the registered investment companies’ 

or business development companies’ use of derivatives are incomplete, inaccurate 

or potentially misleading. Examinations may also cover the associated registered 

investment companies’ or business development companies’ procedures for, and 

oversight of, derivative valuations. 

In addition, the Division will review for compliance with the terms of exemptive order 

conditions and the issues associated with recent market dislocations and volatility, such 

as whether registered investment companies in liquidation are following liquidation 

procedures.

As with adviser examinations, the Division continues to prioritize examinations of 

registered investment companies that have never been examined, including recently 

registered investment companies, and those that have not been examined in a number 

of years.
2024 EXAMINATION PRIORITIES | 13

III. BROKER-DEALERS 

A. Regulation Best Interest

Regulation Best Interest establishes the standard of conduct for broker-dealers at the 

time they recommend to a retail customer a securities transaction or investment strategy. 

When making such a recommendation, a broker-dealer must act in the retail customer’s 

best interest and cannot place the financial or other interest of the broker-dealer ahead 

of the customer’s interest. This obligation is satisfied only if the broker-dealer complies 

with the following specified component obligations: (1) providing certain required 

disclosure, before or at the time of the recommendation, about the recommendation and 

the relationship between the retail customer and the broker-dealer (Disclosure Obligation); 

(2) exercising reasonable diligence, care, and skill in making 

the recommendation (Care Obligation); (3) establishing, 

maintaining, and enforcing policies and procedures 

reasonably designed to address conflicts of interest (Conflict 

of Interest Obligation); and (4) establishing, maintaining, 

and enforcing policies and procedures reasonably designed 

to achieve compliance with Regulation Best Interest 

(Compliance Obligation).

In reviewing whether broker-dealer recommendations are in customers’ best interest, areas 

of particular interest will include: (1) recommendations with regard to products, investment 

strategies, and account types; (2) disclosures made to investors regarding conflicts of interest; 

(3) conflict mitigation practices; (4) processes for reviewing reasonably available alternatives; 

and (5) factors considered in light of the investor’s investment profile, including investment 

goals and account characteristics.

Examinations will focus on those recommended products that are: (1) complex, such as 

derivatives and leveraged ETFs; (2) high cost, such as variable annuities; (3) illiquid, such 

as nontraded REITs and private placements; (4) proprietary; and (5) microcap securities. 

Examinations may also focus on recommendations to certain types of investors, such as 

older investors and those saving for retirement or college. 

As part of the examinations, the Division will evaluate whether the broker-dealer has 

established, maintained, and enforced written policies and procedures reasonably designed 

to achieve compliance with the areas described above as well as with Regulation Best 

Interest as a whole. This analysis will include considering whether the written policies and 

procedures are reasonably designed based on the costs, risks, and rewards of the securities 

and investment strategies that the broker-dealer recommends to customers. 

Regulation Best Interest establishes 

the standard of conduct for brokerdealers at the time they recommend 

to a retail customer a securities 

transaction or investment strategy. 
14 | U.S. SECURITIES AND EXCHANGE COMMISSION

The Division will also continue to focus on dual registrants and examinations will 

encompass firms’ conflicts of interest, 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 and wrap fee accounts). Examinations will also 

assess broker-dealers supervision of branch office locations.

B. Form CRS

The Division’s examinations will review the content of a broker-dealer’s relationship 

summary, such as how the broker-dealer describes: (1) the relationships and services that it 

offers to retail customers; (2) its fees and costs; and (3) its conflicts of interest, and whether 

the broker-dealer discloses any disciplinary history. These examinations will also evaluate 

whether broker-dealers have met their obligations to file their relationship summary with the 

Commission and deliver their relationship summary to retail customers.

C. Broker-Dealer Financial Responsibility Rules

Examinations will focus on broker-dealer compliance with the Net Capital Rule and the 

Customer Protection Rule and related internal processes, procedures and controls. Areas 

of review will include fully paid lending programs and broker-dealer accounting for certain 

types of liabilities, such as reward programs, point programs, gift cards and non-brokerage 

services, and will also assess broker-dealer credit, interest rate, market, and liquidity risk 

management controls to assess whether broker-dealers have sufficient liquidity to manage 

stress events.

D. Broker-Dealer Trading Practices

Examinations will cover broker-dealer equity and fixed income trading practices. In 

particular, examinations will review compliance with: (1) Regulation SHO, including the 

rules regarding aggregation units and locate requirements; (2) Regulation ATS, and whether 

the operations of alternative trading systems are consistent with the disclosures provided in 

Forms ATS and ATS-N; and (3) Exchange Act Rule 15c2-11.

During examinations of wholesale market makers, examinations may include quote 

generation, order routing and execution practices, market data ingestion, regulatory 

controls, and risk management.
2024 EXAMINATION PRIORITIES | 15

IV. SELF-REGULATORY ORGANIZATIONS

A. National Securities Exchanges 

Examinations will focus on whether national securities exchanges are meeting their 

obligations to enforce compliance with self-regulatory organization rules and the federal 

securities laws. Specifically, examinations will focus on exchange order handling and 

exchange surveillance, investigation, and enforcement programs to detect and discipline 

member firm violations. In addition, examinations will focus on exchange oversight of 

regulatory service agreements.

B. Financial Industry Regulatory Authority

The Financial Industry Regulatory Authority (FINRA) oversees approximately 3,400 

brokerage firms, 150,000 branch offices, and more than 620,000 registered representatives 

through examinations, enforcement, and surveillance. In addition, 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 

a majority of 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 analysis is informed by collecting and analyzing extensive 

information and data, regular meetings with key functional areas within FINRA, and 

outreach to various stakeholders, including industry and investor 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.
16 | U.S. SECURITIES AND EXCHANGE COMMISSION

C. Municipal Securities Rulemaking Board

The Municipal Securities Rulemaking Board (MSRB) regulates the activities of brokerdealers that buy, sell, and underwrite municipal securities, and municipal advisors. The 

MSRB establishes rules for municipal broker-dealers (including registered municipal 

securities dealers) and municipal advisors, supports market transparency by making 

municipal securities trade data and disclosure documents available, and conducts education 

and outreach regarding the municipal securities markets. 

The Division, along with FINRA and the federal banking 

regulators, conducts examinations of registered firms to assess 

compliance with MSRB rules, and applicable federal securities 

laws. The Division also applies a risk assessment process, 

similar to the one it uses to oversee FINRA, including outreach 

to various stakeholders, 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 as the supervisory agency. Pursuant to Section 807 of the Dodd-Frank 

Act, 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 

as systemically important. The Division will examine 

the registered clearing agencies for compliance with the 

Commission’s Standards for Covered Clearing Agencies, which 

are rules that require covered clearing agencies to have policies 

and procedures that address, among other things, maintaining 

sufficient financial resources, protecting against credit risks, 

managing member defaults, and managing operational and 

other risks. 

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 Exchange Act, and serve the 

The Municipal Securities Rulemaking 

Board regulates the activities of 

broker-dealers that buy, sell, and 

underwrite municipal securities, and 

municipal advisors.

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 as the 

supervisory agency.
2024 EXAMINATION PRIORITIES | 17

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 the 

Commission’s Division of Trading and Markets and other regulators. In addition, the 

Division also examines security-based swap data repositories, as well as 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 in fiscal year 2024 may include risk management of liquidity, 

models and model validation, margin systems, third-party service providers, and 

operations, and the internal audit function, among other things. Finally, the Division 

consults with the Federal Reserve Board each year on the scope and methodology of the 

Commission’s Dodd-Frank examinations, as required by that Act, and routinely consults 

with the Commission’s Division of Trading and Markets concerning risks it observes in 

its supervisory role over the above clearing agencies. These risks are incorporated into the 

risk-based planning of the examinations.

VI. OTHER MARKET PARTICIPANTS

A. Municipal Advisors 

Examinations will continue to review whether municipal advisors have met their fiduciary 

duty obligation to clients, particularly when providing advice regarding the pricing, method 

of sale, and structure of municipal securities. Examiners will review whether municipal 

advisors are complying with their obligations to document municipal advisory relationships 

and disclose conflicts of interest and requirements related to 

registration, professional qualification, continuing education, 

recordkeeping, and supervision. 

New MSRB Rule G-46, which becomes effective on March 1, 

2024, is designed to establish the core standards of conduct 

for solicitor municipal advisors, which include disclosure of 

conflicts of interest and documentation of client relationships, 

among other things. Examinations of solicitor municipal 

advisors during the second half of fiscal year 2024 will focus 

on compliance with new MSRB Rule G-46.

New MSRB Rule G-46, which 

becomes effective on March 1, 

2024, is designed to establish the 

core standards of conduct for 

solicitor municipal advisors, which 

include disclosure of conflicts of 

interest and documentation of client 

relationships, among other things. 
18 | U.S. SECURITIES AND EXCHANGE COMMISSION

B. Security-Based Swap Dealers

Examinations will continue to focus on whether security-based swap dealers have 

implemented policies and procedures related to compliance with security-based swap rules 

generally and are meeting their obligations under Regulation SBSR to accurately report 

security-based swap transactions to security-based swap data repositories. Moreover, 

examinations will focus on whether security-based swap dealers are complying with 

applicable capital, margin, and segregation requirements and relevant conditions in 

Commission orders governing substituted compliance.

C. Transfer Agents 

Examinations will focus on 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 service certain types of issuers, including 

those issuing microcap and crypto asset securities, and transfer agents that use emerging 

technologies to perform their transfer agent functions.

VII. RISK AREAS IMPACTING VARIOUS MARKET PARTICIPANTS 

A. Information Security and Operational Resiliency

The Division will continue to review broker-dealers’ and advisers’ 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, intense weather-related events, and geopolitical 

concerns. Given these risks and concerns, cybersecurity remains a perennial focus area for all 

registrants. 

The Division will focus on registrants’ policies and procedures, internal controls, oversight of 

third-party vendors (where applicable), governance practices, and responses to cyber-related 

incidents, including those related to ransomware attacks. Part of this review will consider 

whether registrants adequately train staff regarding their identity theft prevention program 

and their policies and procedures designed to protect customer records and information. 

With respect to third-party products and services in particular, the Division will continue 

to assess how registrants identify and address risks to essential business operations. In 

connection with its mission to inform policy, the Division will also look at the concentration 

risk associated with the use of third-party providers, including how registrants are managing 

this risk and the potential impact to the U.S. securities markets. 
2024 EXAMINATION PRIORITIES | 19

In addition, many broker-dealers and advisers consist of a main office and multiple other 

branch offices. Examinations of broker-dealers and advisers will continue to look at firms’ 

practices to prevent account intrusions and safeguard customer records and information, 

including personally identifiable information, especially as it pertains to their multiple 

other offices. 

Lastly, the Commission adopted rule changes to shorten 

the standard settlement cycle for most broker-dealer 

transactions from two business days after the trade date to 

one business day after the trade date. In connection with 

this change, the Division will assess registrant preparations 

associated with this shortening of the settlement cycle, 

which has a compliance date of May 28, 2024. 

Examinations of broker-dealers and advisers will continue to look at firms’ practices to 

promote cyber resiliency. Reviews will include firm practices, policies, and procedures to 

prevent account intrusions and safeguard customer records and information, including 

personally identifiable information. Additional focus will be on the cybersecurity issues 

associated with the use of third-party vendors, including registrant visibility into the 

security and integrity of third-party products and services. The Division will also review 

whether there has been an unauthorized use of third-party providers. 

B. Crypto Assets and Emerging Financial Technology

The Division continues to observe the proliferation of certain types of investments, 

including crypto assets and their associated products and services, and emerging financial 

technology, such as broker-dealer mobile applications 

and advisers choosing to provide automated investment 

advice to their clients. The Division will focus on brokerdealers and advisers offering new products and services 

or employing new practices, particularly technological 

and online solutions that service online accounts aimed at 

meeting the demands of compliance and marketing. The 

Division remains focused on certain services, including 

automated investment tools, artificial intelligence, and 

trading algorithms or platforms, and the risks associated 

with the use of emerging technologies and alternative 

sources of data. 

The compliance date for recently 

adopted rules shortening the standard 

settlement cycle for most broker-dealer 

transactions to one business day after 

the trade date is May 28, 2024.

The Division continues to observe 

the proliferation of certain types of 

investments, including crypto assets 

and their associated products and 

services, and emerging financial 

technology, such as broker-dealer 

mobile applications and advisers 

choosing to provide automated 

investment advice to their clients. 
20 | U.S. SECURITIES AND EXCHANGE COMMISSION

Given the continued volatility of, and activity around, the crypto asset markets, the 

Division will continue to monitor and, when appropriate, conduct examinations of 

registrants. Examinations of registrants will focus on the offer, sale, recommendation 

of, advice regarding, trading in, and other activities in crypto assets or related products. 

Specifically, reviewing whether such registrants involved with crypto assets: (1) meet and 

follow their respective standards of conduct when recommending or advising customers 

and clients regarding crypto assets, with a focus on an initial and ongoing understanding 

of the products, to the extent required by the applicable standard of conduct, particularly 

when the investors are retail-based (including older investors) and investments involve 

retirement assets; and (2) routinely review, update, and enhance their compliance 

practices (including crypto asset wallet reviews, custody practices, Bank Secrecy Act 

(BSA) compliance reviews, and valuation procedures), risk disclosures, and operational 

resiliency practices (i.e., data integrity and business continuity plans), if required. With 

respect to crypto assets that are funds or securities, the Division will consider whether 

advisers are complying with the custody requirements under the Advisers Act (Rule 

206(4)-2). In addition, the Division will assess whether any technological risks associated 

with the use of blockchain and distributed ledger technology have been addressed, 

including whether compliance policies and procedures are reasonably designed, accurate 

disclosures are made and the risks pertaining to the security of crypto asset securities are 

addressed, if required by applicable law. 

C. Regulation Systems Compliance and Integrity

The Commission adopted Regulation Systems Compliance and Integrity (SCI) in 2014 

to strengthen the technology infrastructure of the U.S. securities markets. Regulation 

SCI entities include national securities exchanges, registered and certain exempt clearing 

agencies, FINRA, MSRB, plan processors, and alternative trading systems that meet 

certain volume thresholds. Among other things, these critical market infrastructure 

entities must establish, maintain, and enforce written policies and procedures reasonably 

designed to ensure that their systems’ capacity, integrity, resiliency, availability, 

and security is adequate to maintain their operational capability and promote the 

maintenance of fair and orderly markets. The Division will continue to evaluate whether 

SCI entities have established, maintained, and enforced written policies and procedures, 

as required. One area of focus will include whether the policies and procedures of SCI 

entities are reasonably designed to ensure the security of the SCI systems, including the 

physical security of the systems housed in data centers, as required. 
2024 EXAMINATION PRIORITIES | 21

D. Anti-Money Laundering 

The BSA requires certain financial institutions, including broker-dealers and certain 

registered investment companies, to establish anti-money laundering (AML) programs 

that are tailored to address the risks associated with the 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. These programs must, among other 

things, include policies, procedures, and internal controls reasonably designed to achieve 

compliance with the BSA and its implementing rules; independent testing; and risk-based 

procedures to perform customer due diligence (as required by the Customer Due Diligence 

rule), which includes identifying and verifying the identity of customers and conducting 

ongoing monitoring to identify and report suspicious transactions. Where appropriate, 

certain financial institutions must also file Suspicious Activity Reports (SARs) with the 

Financial Crimes Enforcement Network. SARs can be used to detect and combat market 

manipulation, insider trading, Ponzi schemes, corruption, money laundering, terrorist 

financing, and a variety of other illicit activities potentially violative of securities and other 

laws and regulations. 

The Division will continue to focus on AML programs to review whether broker-dealers 

and certain registered investment companies are: (1) appropriately tailoring their AML 

program to their business model and associated AML risks; (2) conducting independent 

testing; (3) establishing an adequate customer identification program, including for 

beneficial owners of legal entity customers; and (4) meeting their SAR filing obligations. 

Examinations of certain registered investment companies will also review policies and 

procedures for oversight of applicable financial intermediaries. 

Also, the Division will review whether broker-dealers and advisers are monitoring 

Office of Foreign Assets Control sanctions and ensuring compliance with such sanctions. 
22 | U.S. SECURITIES AND EXCHANGE COMMISSION

VIII. CONCLUSION

These priorities reflect the Division’s assessment of certain risks, issues, and policy 

matters arising from market and regulatory developments, information gathered 

from examinations, and other sources, including tips, complaints, and referrals, and 

coordination with other Divisions and Offices at the Commission as well as other 

regulators. While the Division will allocate significant resources to the examination issues 

described herein, it will also conduct examinations focused on and devote resources to new 

or emerging risks, products and services, market events, and 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 

Commission policy. Our contact information is available at https://www.sec.gov/exams. 

If you suspect or observe activity that may violate the federal securities laws or otherwise 

operates to harm investors, please notify Commission staff at https://www.sec.gov/tcr.

U.S. Securities and 

Exchange Commission

100 F Street NE

Washington, DC 20549

SEC.gov