On November 17, 2025, the Division of Examinations (the Division) of the U.S. Securities and Exchange Commission (SEC) released its 2026 examination priorities (the Priorities). The Priorities lay out the Division’s areas of interest when examining investment advisers, investment companies, broker-dealers, self-regulatory organizations, clearing agencies, and other market participants in the coming year. The Priorities are consistent with the SEC’s shift towards transparent and practical compliance and away from “regulation by enforcement.” Below, we outline the key takeaways from the Division’s Priorities for investment advisers (advisers), broker-dealers, and investment companies. The Division’s full Priorities can be found here.
- Back to Basics. Consistent with Chairman Atkins’ approach, the Priorities largely reflect the SEC’s continued focus on core compliance issues, such as fiduciary duties, conflicts of interest, Regulation Best Interest, and protection of retail customers.
- Fiduciary Duties, Conflicts of Interest, and Regulation Best Interest. With the back-to-basics theme, the Priorities show that fiduciary duties, conflicts of interest, and Regulation Best Interest are core examination themes. For advisers, their adherence to their duty of care and duty of loyalty will be a key priority, with particular focus on reviewing advisers’ investment advice and disclosures to retail investors, those saving for retirement, and older customers. The Division will also scrutinize three types of investment products: alternative investments, complex investments (such as leveraged ETFs), or products that have higher costs associated with investing. For broker-dealers, the Priorities focused on four areas of interest: (1) product and investment strategy recommendations; (2) conflict identification and mitigation practices; (3) processes for reviewing reasonably available alternatives; and (4) processes for satisfying the Care Obligation. And, like advisers, the Division intends to focus on broker-dealers’ recommendations related to complex or alternative products.
- Regulation S-P. In preparation for compliance with the recent amendments to Regulation S-P, the Priorities called out Regulation S-P as a risk area. The Division will focus on firms’ policies and procedures, internal controls, oversight of third-party vendors, and governance practices related to Regulation S-P. The Division will also engage firms about their 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 amendments to Regulation S-P are effective, the Division will examine whether firms have developed, implemented, and maintained policies and procedures in accordance with the amendments that address administrative, technical, and physical safeguards for the protection of customer information.
- Artificial Intelligence and Emerging Technologies. With artificial intelligence (AI) remaining the buzzword of the year, the Division unsurprisingly remains focused on how firms use emerging technologies like automated investing tools, AI technologies, and trading algorithms or platforms, with particular attention to how firms deploy automated investment advisory services, recommendations, and related tools. The Division also intends to review AI-related disclosures and representations for accuracy and assess whether firms have implemented adequate policies and procedures to monitor and supervise the use of AI technologies.
- Digital Assets and Crypto. In a significant shift from prior years, the Division did not mention digital assets or crypto as a risk area or focus of examination in the Priorities. This does not necessarily mean that firms engaged in crypto-related activities will not face examination questions on those activities, but it is consistent with the SEC’s recent approach to facilitating crypto innovation.
- Private Funds. While there is not a dedicated section on private funds, the Priorities include private funds as a focus in a variety of examination areas. For example, the Division will focus on advisers to newly launched private funds, advisers that have not advised private funds previously, and recommendations of private fund products or products that invest in illiquid assets like private equity or credit.
- Adviser Compliance Programs. The Division highlighted advisers’ compliance programs as a “fundamental part of the examination process.” The Division will focus on evaluating six areas of the compliance program in particular: marketing; valuation, trading and portfolio management; disclosure and filing accuracy; custody; and annual reviews. With these areas, the Division intends to focus on whether the policies and procedures are implemented and enforced, and whether disclosures address fee-related conflicts, with focus on conflicts that arise from account and product compensation structures.
- Registered Investment Companies (RICs). With the SEC’s focus on retail investors, the Division will continue to prioritize examination of RICs, including mutual funds and ETFs. The Division will focus on fund fees and expenses, including waivers and reimbursements, portfolio management practices and accuracy of related-disclosures, and newly registered RICs or RICs that have not been examined previously. In addition, the Division highlighted review of RICs that participate in mergers or similar transactions, use of complex strategies or significant holdings in less liquid or illiquid investments, and use of novel strategies or investments, including leveraged funds.
Foley’s Securities Enforcement & Litigation Practice Group offers deep experience in guiding clients through the types of matters discussed herein, with more than 50 attorneys — including former SEC, PCAOB, CFTC, and FINRA officials — who have advised public companies, audit committees, broker dealers, underwriters, investment firms, and global market participants. Drawing on decades of regulatory and litigation experience, our team regularly assists clients in responding to examinations and enforcement actions, conducting internal investigations, and advising on supervisory, compliance, and risk management frameworks.
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