The Securities and Exchange Commission is focusing inspections of RIAs on conflicts of interest that rise from being dually registered with a broker-dealer as well as an RIA. The agency says its staff is also focusing on undisclosed fee arrangements between advisors and mutual funds and custody rules.
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The SEC released its exam priorities every year “to communicate with investors and registrants about areas that are perceived by the staff to have heightened risk, and to support the SEC’s mission to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation.”
With the agency now responsible for examining 2000 newly registered hedge funds and private equity funds, the exam program remains under pressure to create a credible deterrent to fraud and incompetence by RIAs.