Under Regulation Best Interest (Reg BI), the SEC imposes a best interest standard on account recommendations by broker-dealers. This is because recommending an account type is viewed.
Each year, the SEC’s Division of Examinations (f.k.a. OCIE) (the “
Division”) releases its priorities for the upcoming year, providing SEC registrants with a helpful tool to assist in managing, reviewing, and updating their compliance programs. The 2021 Examination Priorities (the “
2021 Priorities”), which were released last month, indicate a greater focus on conflicts of interest for broker-dealers (“
BDs”) and registered investment advisers (“
RIAs”); a special emphasis on disclosure of climate and environmental, social, and governance (“
ESG”)-related risks; and concern about risks related to financial technology (“
FinTech”) investments, including digital assets.
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The 2021 Priorities offer another indication of the Division’s sharpening focus on the investment management industry. Despite the significant increase in the number of RIAs and disruptions due to the pandemic, the 2021 Priorities report that the Division still managed to examine 15