2026 Exam Priorities Remain Focused on Core Issues

On November 17, 2025, the U.S. Securities and Exchange Commission’s Division of Examinations (Division) released its annual examination priorities for fiscal year 2026 (Exam Priorities).  The Division develops its examinations priorities in “coordination and consultation” with other divisions and offices throughout the SEC and is informed by the Division’s interactions with market participants and other regulators.  Although the Exam Priorities are front of mind for the Division, they are not the only areas that the Division will examine but rather “reflect practices, products, and services that the Division believes present potentially heightened risks to investors or integrity to the U.S. capital markets.” These Exam Priorities are also the first ones issued under Chairman Paul Atkins’ leadership and are ostensibly aligned with the priorities of the new Commission.  For example, in addition to retail investor protection, the Division stated that it “recognize[s]” that its work plays a role in “facilitating efficient capital formation,” which is a priority area for the Commission.  

Notwithstanding the change in leadership, however, the 2026 Exam Priorities remain largely consistent with those announced in prior years apart from crypto assets, which are not mentioned anywhere in the current document.  In particular, the Division continues to emphasize standards of care for investment advisers and broker-dealers, effectiveness of compliance programs, cybersecurity issues related to “mission-critical services,” and retail sales practices particularly with respect to complex products such as variable and registered index-linked annuities.  Below is a summary of key examination focus areas for investment advisers, investment companies, and broker-dealers.[1]  Registrants may find it prudent to review their compliance programs with an eye toward these Exam Priorities and assess their readiness for examinations.

Investment Advisers

Adherence to Fiduciary Standards of Conduct

The adherence by investment advisers to their duty of care and duty of loyalty remains an examination priority, especially in the context of retail investors. The Division’s examination of advisers for compliance with fiduciary obligations will include: “(1) the impact of advisers’ financial conflicts of interest on providing impartial advice; (2) advisers’ consideration of the various factors associated with their investment advice, such as generally the cost, investment product’s or strategy’s investment objectives, characteristics (including any special or unusual features), liquidity, risks and potential benefits, volatility, likely performance in a variety of market and economic conditions, time horizon, and cost of exit; and (3) advisers seeking best execution with the goal of maximizing value for their clients under the particular circumstances occurring at the time of the transaction.” 

The Division, moreover, will focus on certain investment strategies or characteristics including alternative investments, complex investments and leveraged and/or inverse ETFs, and high commission or expensive products relative to similar products/investments.  The Division will also focus on investment recommendations “for consistency with product disclosures and the clients’ investment objectives, risk tolerance, and financial/personal backgrounds,” with an emphasis on, among other things, recommendations to older investors and those saving for retirement. 

Effectiveness of Advisers’ Compliance Programs

The Division remains focused on the effectiveness of advisers’ compliance programs.  The Division’s examinations in this area will “typically include an evaluation of the core areas of advisers’ compliance programs which include, as applicable and appropriate for each examination, marketing, valuation, trading, portfolio management, disclosure and filings, and custody.”  The Division may also focus on whether policies and procedures are implemented and enforced and whether disclosures address fee-related conflicts.  The Division’s focus may shift, however, depending on “an adviser’s practices or products.”  Finally, the Division will continue to prioritize examinations of never-before-examined firms.

Investment Companies

The Division will continue its focus on registered investment companies, including mutual funds and ETFs, because of their “importance to retail investors, particularly those saving for retirement.”  Examinations generally will focus on compliance programs, disclosures, filings, and governance practices. In addition, investment company operations of particular focus include fund fees and expenses and portfolio management practices and disclosures for consistency with fund filings and marketing materials as well as compliance with the amended fund “Names Rule” after the effective date.[2]  Finally, the Division will also prioritize never-before-examined investment companies and funds.

Broker-Dealers

Financial Responsibility Rules

Broker-dealer compliance with the net capital rule, the customer protection rule, and related internal processes, procedures, and controls remain areas of focus. Areas of interest will include “timeliness of financial notifications and other required filings” and will focus on firms’ operational resiliency programs, including, among other things, supervision of third-party/vendor-provided record keeping services related to the preparation of financial reporting.  In addition, the Division remains interested in firms’ cash sweep programs and prime brokerage activities.

Trading Related Practices and Services

The Division will continue to focus on broker-dealer equity and fixed income trading practices.  Specific areas of review will include, among other things, broker-dealer trading practices associated with extended hours trading, priority of orders, and mark-ups disclosure. Broker-dealers’ routing and execution of orders also will be in focus including best execution and the pricing and valuation of illiquid instruments such as variable rate demand obligations.  Finally, the Division will prioritize Regulation SHO and will examine alternative trading systems.

Retail Sales Practices, Including Compliance with Regulation Best Interest

Regulation Best Interest will continue to be a primary area of focus for the Division.  Sales practice areas of interest include, among other things, recommendations regarding products and investment strategies, conflict identification and mitigation practices, processes for reviewing reasonably available alternatives, and processes for satisfying the Care Obligation.  In particular, examinations will focus on products that are complex or tax advantaged, including “variable and registered index-linked annuities; ETFs that invest in illiquid assets such as private equity or private credit; municipal securities, including 529 Plans; private placements; structured products; alternative investments; and other products that have complex fee structures or return calculations, are based on exotic benchmarks, are illiquid, or represent a growth area for retail investment.”  Additionally, examinations “may also focus on dual registrants and encompass reviews of firms’ processes for identifying and mitigating and eliminating conflicts of interest where dual registrants receive compensation or other financial incentives that may create conflicts of interest….”  Firms’ relationship summaries (Form CRS) may also draw attention with respect to how they describe the “relationships and services” that they offer to retail investors, fees and costs, conflicts of interest, and the accuracy of firms’ disclosures related to their financial professionals’ disciplinary history.

Risk Areas Impacting Various Market Participants

The Division remains keenly focused on information security and operational resiliency across the spectrum of market participants.  In particular, the Division will continue to scrutinize registrant practices designed “to prevent interruptions to mission-critical services and to protect investor information, records, and assets” considering the heightened operation risks associated with, among other things, cybersecurity attacks and firms’ dispersed operations.  One of the Division’s “perennial” examination priorities is the “safeguarding of customer records and information” and particular attention will be paid to “firms’ policies and procedures pertaining to governance practices, data loss prevention, access controls, account management, and responses and recovery to cyber-related incidents, including those related to ransomware attacks.”    

The Division will also concentrate on compliance issues surrounding Regulations S-ID and S-P (including the 2024 amendments to Regulation S-P).  Regarding Regulation S-ID, the Division will assess “firms’ development and implementation of a written Identity Theft Prevention Program (Program) that is designed to detect, prevent, and mitigate identity theft in connection with covered accounts.”  In advance of the compliance dates for Regulation S-P amendments (larger entities must comply on December 3, 2025, and smaller entities on June 3, 2026), moreover, the Division will make inquiries about firms’ “progress in preparing incident response programs reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information” and, after the respective compliance dates, will “examine whether firms have developed, implemented, and maintained policies and procedures in accordance” with the rule’s new requirements.  The Division also will continue to focus on the use of certain emerging products (such as automated investment tools, AI technologies, and trading algorithms or platforms) with an eye toward, among other things, ensuring fair and accurate investor disclosures and related operations and controls consistent with those disclosures.  Finally, the Division will continue to spotlight AML programs and will, among other things, review whether broker-dealers and certain registered investment companies are “tailoring and updating their AML program to their business model and associated AML risks,” review whether appropriate independent testing is being performed, and access whether firms are compliant with their Suspicious Activity Report obligations.

Summary Comparison of SEC Fiscal Year 2025 versus 2026 Examination Priorities

[1] For ease of reference, we have included a chart summarizing the fiscal year 2026 Exam Priorities as compared to those announced for fiscal year 2025.

[2] See SEC, Investment Company Names, Release No. IC-35500 (Mar. 14, 2025) (extending the compliance date for the Names Rule amendments from Dec. 11, 2025, to Jun. 11, 2026, for larger fund groups and from Jun. 11, 2026, to Dec. 11, 2026, for smaller fund groups).