SEC reveals "Top 10 Compliance Issues for 2008" at SIFMA Conference
Commissioner Lori Richards revealed the SEC’s “Top 10 Compliance Issues for 2008” during the general session at the 40th annual SIFMA national conference yesterday in
- Valuations.
- Firm controls over non-public information. In particular, the SEC is interested in whether the firm has identified the type and sources of non-public information to which it is privy, and whether the firm has implemented and properly tested procedures for protecting that information.
- Retail sales practices – with an emphasis on protecting seniors.
- Supervision.
- Net capital/internal controls (which will receive increased focus given recent developments). Ms. Richards noted that 20% of the exams last year uncovered errors in net capital calculation.
- Trading.
- Fixed Income.
- Rating agencies.
- Conflicts of interest. The “hot list” for this area includes payments by advisors to broker dealers to appear on “recommended advisor lists,” and broker-dealers who sell interests in affiliated hedge funds.
- Anti-money laundering.
- Information/account security (refusing to be limited to just 10 areas, Ms. Richard actually named 11 key areas of scrutiny for 2008). The SEC is particularly interested in whether broker-dealers have adequate control over their customers’ assets and information, and what controls broker-dealers adopt when they outsource regulating activities. According to Ms. Richards, the SEC will focus on midsized firms this year.
