A Look at SEC Examination Priorities: Amended Marketing Rule & RIAs to Private Funds

As you know, each year the SEC's Division of Examinations publishes its exam priorities, sending many firms into a hurry to ensure that they are SEC exam ready. Join me in this video series as I go through the list of exam priorities to provide insight into what the SEC will look for during the exam year. Let's get started.

The number one focus area for the SEC is the amended marketing rule. The rule went into effect November 4th, 2022, and it's of high priority for the SEC, and it only applies to registered investment advisors. During the examination process, the SEC will assess whether the advisor has adopted written policies and procedures that are designed to prevent violations of the rule and that the advisor has complied with the substantive requirement, meaning has the advisor demonstrated a reasonable basis to support or validate any material statements of facts in their performance advertisement, testimonials, endorsements, or any third party ratings?

During the examination process, the SEC will assess private fund advisors on the following items: whether they've disclosed conflicts of interest to investors and funds, whether they are calculating and allocating fees and expenses accurately and properly disclosing it to investors and funds, whether they are compliant with the marketing rule and if they are using alternative data such as expert networks. If so, the SEC will assess the policies and procedures for compliance with the code of ethics requirements. And lastly, they will assess compliance with the custody rule, including whether the audited financials were delivered timely and by a permissible auditor.

I know that seems like a lot, but there is more. Please tune in for the next video on the series where I'll discuss standards of conduct and ESG. I welcome you to connect with me on LinkedIn. Again, my name is TaNeka Ray with EisnerAmper. Thank you for watching.

The information provided in this video is not to be construed as an interpretation of the regulatory requirements, application of the regulations to a specific business, or legal advice.