The Securities and Exchange Commission (SEC), Division of Examinations, has posted the examination priorities for 2021. The Division publishes its examination priorities annually to provide insights into its mission.
According to the Division, they will add greater focus on climate-related risks as well as on conflicts of interest for brokers and investment advisers, and risks relating to Fintech in its initiatives and examinations.
Specifically, in regards to Fintech, the Division states:
Financial Technology (Fintech) and Innovation, Including Digital Assets – Among other areas, examinations will focus on evaluating whether registrants are operating consistently with their representations, whether firms are handling customer orders in accordance with their instructions, and review compliance around trade recommendations made in mobile applications. Examinations of market participants engaged with digital assets will continue to assess the following: whether investments are in the best interests of investors; portfolio management and trading practices; safety of client funds and assets; pricing and valuation; effectiveness of compliance programs and controls; and supervision of representatives’ outside business activities.
“Our priorities reflect the complicated, diverse, and evolving nature of the risks to investors and the markets, including climate and ESG,” said Division Director Pete Driscoll.
The 2021 Examination Priorities may be downloaded here.