In an effort to make sure that registrants adequately prepare for supervisory examinations, OCIE published its 2013 examination priorities. There are few surprises in the release, but a slight shift in priorities may signal enforcement cases to come.
Not surprisingly, OCIE will continue to focus on identification theft and fraud. But registrants should expect examiners increasingly to use quantitative tools to identify and isolate fraud. OCIE also expects to focus “alternative” strategies in retail products (and whether compliance departments are adequately trained and funded to handle those strategies), and to examine dually registered investment advisers and broker-dealers.
OCIE will also consider if revenue sharing payments are really “payments for distribution in guise,” and whether fund boards are adequately overseeing these payments. OCIE is also interested in fund boards’ involvement in valuation and annual contract reviews. Indeed, OCIE’s list of priorities should be required reading for fund boards, since they feature quite prominently in it.