SEC 2026 Exam Priorities – What Advisers & Broker-Dealers Must Know

SEC³ Compliance Alert
December 1, 2025

SEC 2026 Examination Priorities
On November 17, 2025, the SEC’s Division of Examinations released its Fiscal Year 2026 Examination Priorities. The Division continues to emphasize investor protection, market integrity, and transparent, risk-based oversight. The priorities most relevant to investment advisers, funds, and broker-dealers fall into several core themes.

Fiduciary Standard, Standards of Conduct, and Product Oversight
The SEC will continue assessing whether advisers are meeting their fiduciary obligations, especially for retail investors. Examiners will review whether recommendations align with clients’ goals, risk tolerance, and cost considerations. There is heightened focus on alternative investments, illiquid strategies, complex ETFs, leveraged or inverse products, and high-cost offerings. Advisers who manage both private funds and separately managed accounts, or who serve older or retirement investors, remain priority segments. Dual registrants will be examined for conflicts arising from compensation structures and account-type recommendations. The SEC is also increasingly focused on advisers recommending complex or volatile products to older investors and retirement savers, and on firms that operate in both the private-fund and retail spaces.

Effectiveness of Compliance Programs:
The SEC will evaluate whether advisers maintain effective, operational compliance programs, not just written policies. Examiners will look for evidence of monitoring, escalation, testing, remediation, and day-to-day implementation. Priority areas include advertising and performance claims, valuation, custody, fee-related conflicts, trading practices, and portfolio management. Newly registered and never-examined advisers remain a dedicated focus category.

Investment Companies and Funds:
The SEC will examine mutual funds and ETFs for fees and expenses, portfolio management practices, adherence to stated strategies, and compliance with the amended Names Rule. The SEC highlighted two compliance dates for the amended rule: June 11, 2026 for larger fund groups and December 11, 2026 for smaller ones. Examiners will also review fund mergers and operational transitions, complex or illiquid strategies, and practices around leverage and liquidity-risk management.

Cybersecurity, Operational Resiliency, Regulation S-P, and Regulation S-ID:
Cybersecurity remains a central area of focus. Examiners will review governance structures, data-loss prevention controls, access controls, vendor oversight, incident-response procedures, ransomware readiness, and emerging AI-related cyber risks. Following the amended Regulation S-P compliance dates, the SEC will evaluate firms’ updated incident-response programs and safeguarding obligations. Identity-theft programs under Regulation S-ID also remain a priority.

Emerging Financial Technology, AI, and Complex Products:
The SEC will examine how advisers use technology, including AI-driven tools used in advisory services, trading, fraud detection, and AML functions. Disclosures about AI capabilities must be accurate and supported by actual processes. Examiners will evaluate governance around algorithmic tools, automated recommendations, and reliance on vendor-provided technology.

Broker-Dealer Priorities:
For broker-dealers, the SEC will focus on financial responsibility rules, liquidity risk management, operational resiliency, cash sweep programs, and prime brokerage activities. Trading-related reviews will include extended-hours activity, municipal securities, the pricing and valuation of illiquid instruments, best execution, and order-routing disclosures under Regulation NMS Rule 605. Regulation Best Interest remains a core priority, particularly for recommendations involving complex or tax-advantaged products, conflicts of interest, account-type recommendations, reasonably available alternatives, and recommendations to older investors.

Never-Examined and Recently Registered Firms:
The SEC will continue prioritizing examinations of newly registered advisers and investment companies, as well as firms that have never undergone an examination, with the goal of evaluating whether compliance programs are appropriately developed and implemented from the outset.

Anti-Money Laundering and OFAC Compliance:
Broker-dealers and certain registered investment companies will be examined for AML program effectiveness, including risk-based program design, independent testing, customer identification and beneficial-ownership verification, suspicious-activity monitoring, and compliance with OFAC sanctions requirements.

Why This Matters and How SEC3 Compliance Helps:
The 2026 priorities emphasize the SEC’s expectation that firms demonstrate real, functioning controls, not just written policies. With increased scrutiny around complex products, emerging technologies, AI, cybersecurity, operational resiliency, and conflicts of interest, firms benefit from proactive, well-documented preparation. SEC3 Compliance supports firms by helping them: build and document robust compliance frameworks; conduct gap assessments and operationalize regulatory requirements; review marketing, performance, and valuation practices; update cybersecurity, vendor-risk, and AI-governance structures; and prepare for risk-based SEC examinations across evolving focus areas. The SEC also included broader priorities for market participants such as SROs, clearing agencies, municipal advisors, transfer agents, funding portals, and security-based swap entities. This summary focuses primarily on advisers, funds, and broker-dealers.   Notably, the 2026 priorities do not include crypto markets as a standalone section, marking a shift from prior years.

Need assistance with your compliance program? SEC’s team of experienced compliance professionals can help. For more information, please email us at info@sec3compliance.com, call (212) 706-4029 x 214, or visit our website at www.sec3compliance.com.

SEC3 provides links to other publicly available legal and compliance websites for your convenience. These links have been selected because we believe they provide valuable information and guidance. The information in this e-newsletter is for general guidance only. It does not constitute the provision of legal advice, tax advice, accounting services, or professional consulting of any kind

Photo by Aaron Burden on Unsplash