Yesterday, the SEC released its priorities for the Division of Examinations for this year. Examination priorities are published annually reflecting areas/topics that present potential risks to investors and the integrity of the U.S. capital markets. Division Director Richard R. Best said in the introduction:
“Our priorities reflect the changing landscape and associated risks in the securities market and are the product of a risk-based approach to examination selection that balances our resources across a diverse registrant base. We will emphasize compliance with new SEC rules applicable to investment advisers and investment companies as well as continue our focus on emerging issues and rules aimed at protecting retail investors. Our examination program continues moving forward and remains committed to furthering investor protection through high-quality examinations and staying abreast of the latest industry trends and emerging risks to investors and the markets.”
ESG issues made the list:
“The Division will continue its focus on ESG-related advisory services and fund offerings, including whether funds are operating in the manner set forth in their disclosures. In addition, the Division will assess whether ESG products are appropriately labeled and whether recommendations of such products for retail investors are made in the investors’ best interests.”
Maybe I am wrong here but it seems like Examinations may essentially enforce the Names Rule and Enhanced ESG Disclosures Rule even though they are still proposed and, according to the most recent Reg Flex Agenda, probably won’t be finalized until October or later.
