SEC Division of Examination Priorities for 2022

Rounding out a series of quarter-end announcements from the US Securities and Exchange Commission (SEC), the Division of Examinations (Exams) announced its 2022 examination priorities on March 30, 2022. These priorities reflect SEC Chair Gary Gensler's stated view that the examinations program is crucial to the SEC's work to protect investors and instill trust in markets. Exams will focus on, among other things, (i) private funds, (ii) broker-dealers, (iii) Environmental, Social, and Governance (ESG) or impact investing, (iv) financial technology (FinTech) and crypto-assets, and (v) information security (InfoSec) and operational resiliency.

InfoSec and Operational Resiliency: Exams stressed that the consequences of information security failures by RIAs and broker-dealers may extend to other market participants and retail investors, making “vigilant protection of data . . . critical to the operation of financial markets and the confidence of its participants.” Exams will continue to review firms' efforts to prevent interruptions to mission-critical services, protect investor information, and safeguard customer accounts and prevent account intrusions, both in-house and through oversight of vendors and service providers. Exams also will review firms' efforts to address and respond to malicious email activities and ransomware attacks, identify and detect red flags related to identity theft, and manage operational risk as a result of a dispersed workforce. In addition, Exams will review business continuity and disaster recovery plans with a focus on the impact of climate risk and substantial disruptions to business operations and the maturation of the plans over the years. SOURCE