The SEC 2016 Examination Priorities: Exploring Recent Trends and Developments
On January 11, 2016, the SEC's Office of Compliance Inspections and Examinations (OCIE) announced its examination priorities for this year. The 2016 examination priorities are organized around the three thematic areas: (1) examining matters of importance to retail investors, including investors saving for retirement; (2) assessing issues related to market-wide risks; and (3) using data analytics to identify and examine registrants that may be engaged in illegal activity. The OCIE identified new areas of focus related to these priorities, which include liquidity controls, product promotions, exchange-traded funds and variable annuities. There will also be a continuing focus directed on cybersecurity, microcap fraud, fee selection and reverse churning.
These examination priorities impact most security industry participants including registered investment advisers, broker dealers, registered investment companies, and transfer agents. Although the OCIE indicated that the list is not exhaustive, the affected professionals are recommended to review and update their compliance practices based on the specified areas mentioned in preparation for a SEC examination.
In this two-hour LIVE webcast, a panel of distinguished professionals and thought leaders will help security industry professionals and companies understand the 2016 SEC Examination Priorities. Speakers will also offer best practices to ensure compliance and preparedness in the event of an examination.
In a two-hour live webcast, the speakers will discuss:
- Purpose and Thematic Focus of 2016 Examination
- Protecting Retail Investors and Investors Saving for Retirement
- Assessing Market-Wide Risks
- Using Data Analytics to Identify Signals of Potential Illegal Activity
- Other Initiatives
- Impact on Security Industry Participants
- Best Compliance Practices
Aegis J. Frumento, Partner
Stern Tannenbaum & Bell LLP
- What is OCIE and how does it fit in the SEC enforcement toolbox?
- budget and other metrics, etc
- What factors determine OCIE's priorities?
- prior year enforcement actions
- prior year exam findings
- "political" agendas
- A general overview of this year's initiatives.
- a typical brief intro to this year's topics
- How have OCIE's priorities evolved over the past several years, and what can we learn from those changes.
- review historical trends
- exam the relationships between OCIE exams and enforcement division actions
Brian L Friedman, Senior Counsel
Proskauer Rose LLP
- The SEC’s 2016 examination priorities reflect a focus on technology. Not only is the SEC interested in how firms safeguard their systems and data, but also the SEC will continue to use data analysis to identify potential improper activity.
- The SEC is continuing to look at firms’ cybersecurity compliance and controls and what practices and procedures they have implemented.
- The SEC has provided guidance in this area and inform best practices, which may include, but are not limited to: written policies and procedures; written response plans for data breaches; conducting tabletop exercises etc.
- The SEC has started to bring enforcement proceedings related to cybersecurity – R.T. Jones Capital
- The SEC is increasingly using data analysis to identify elevated risk and potential illegal activity, including microcap fraud, excessive trading, recidivist employees and AML issues. As the SEC increases its use of data, firms may want to do their own analysis to spot trends and address any potential issues.
Daniel G. Viola, Partner
Sadis & Goldberg LLP
- Remote examinations
- Expense Allocations
- CCO Liability
Omar Hakim, Esq., Attorney
Mona Shah & Associates
- FINRA highlighted its focus on “EB-5 investments funds” for the first time in 2015, it reiterated its intent to focus on this area for 2016. SEC has highlighted the EB-5 program as a priority in its examination letter for the first time in 2016. Will talk about how it took time for the EB-5 community to realize that despite this being an immigration program, securities compliance was also very important and now we have consensus on this. And how recent high-profile fraud in EB-5 offerings and increasing popularity of the program has caused the SEC to pay much greater attention.
- SEC letter says “we will review private placements, including offerings involving Regulation D of the Securities Act of 1933 or the Immigrant Investor Program (“EB-5 Program”) to evaluate whether legal requirements are being met in the areas of due diligence, disclosure, and suitability.” Will talk about how what makes an investment suitable is major component that makes EB-5 different from other securities offerings. A primary purpose of an EB-5 investment is to obtain a green card, so need to make sure that the investment has all of the components necessary to obtain the desired immigration result.
- Will talk about legislation proposed by the SEC in conjunction with United States Citizenship and Immigration Services to impose securities laws and integrity measures specific to the EB-5 program. This is a result of the belief that existing securities laws are not adequate in the context of EB-5, and can talk about the reasons why this is.
- Talk about unique challenges that face EB-5 issuers in seeking to comply with existing securities laws and proposed laws.
Who Should Attend:
- Investment Advisers
- Investment Companies
- Broker Dealers
- Transfer Agents
- Clearing Agencies
- Public Pension Advisers
- Municipal Advisors
- Private Fund Advisers
- Other Interested Security Industry Participants
Brian L. Friedman is a senior counsel in the Litigation Department and a member of the Financial Services Group and Securities Litigation Group. He regularly represents clients in a variety of complex matters, including litigations, investigations and enforcement proceedings in the financial services area, contract disputes and business torts. His practice includes matters in state and federal courts, and in domestic and international arbitrations. A significant portion of Brian’s practice is dedicated to representing and counseling major brokerage firms, FCMs and other leading financial institutions in a wide variety of areas, including securities and commodities litigations, investigations and enforcement proceedings, arbitrations and mediations, compliance issues and regulatory controversies. Representative matters include state and federal suits regarding short selling practices, securitization disputes, as well as multiple investigations by SEC, CFTC, FINRA and NYSE regarding electronic trading, surveillance, email retention and other issues.
Brian L. Friedman is a senior counsel in the Litigation Department and a member of the Financial Services Group and …
Daniel G. Viola is the Head of the Regulatory and Compliance Group. He structures and organizes broker-dealers, investment advisers, funds and regularly counsels investment professionals in connection with regulatory and corporate matters. Mr. Viola served as a Senior Compliance Examiner for the Northeast Regional Office of the SEC, where he worked from 1992 through 1996. During his tenure at the SEC, Mr. Viola worked on several compliance inspection projects and enforcement actions involving examinations of registered investment advisers, ensuring compliance with federal and state securities laws. Mr. Viola’s examination experience includes financial statement, performance advertising, and disclosure document reviews, as well as, analysis of investment adviser and hedge fund issues arising under ERISA and blue-sky laws
After leaving the SEC, Mr. Viola founded VIOCO, Ltd. (“VIOCO”), which provided consulting services to investment advisers and broker-dealers in the field of regulatory compliance, including compliance policy planning and implementation of soft dollar reviews, mock SEC compliance audits, and compliance training for supervisory personnel. VIOCO also served as a consultant to provide mandated corrective consulting to investment advisers that were sanctioned by the SEC.
Mr. Viola received a Juris Doctor degree from St. John’s School of Law in 1996 and a B.S. Degree in Finance from St. John’s University in 1992. He is a member of the New York Bar and a FINRA arbitrator.
Daniel G. Viola is the Head of the Regulatory and Compliance Group. He structures and organizes broker-dealers, investment advisers, funds …
Aegis J. Frumento is a partner and the co-head of the Financial Markets Practice Group of Stern, Tannenbaum & Bell LLP in New York City. He has over 30 years’ experience representing broker-dealers, registered investment advisors and other financial market participants in legal and compliance matters. His current practice includes representing witnesses, subjects, targets and respondents in SEC and FINRA investigations and enforcement actions, preparing and advocating SEC whistleblower submissions, and generally counseling industry participants on regulatory compliance matters. Before joining Stern Tannenbaum in 2011, Aegis served as the Managing Director heading Morgan Stanley Smith Barney’s Executive Financial Services Department; the co-head of the Financial Markets Group at Duane Morris LLP; and the managing partner of the securities industry law firm Singer Frumento LLP. He is a graduate of Harvard College and NYU Law School, and frequently speaks, writes and is quoted in the media on securities law and industry-related issues.
Aegis J. Frumento is a partner and the co-head of the Financial Markets Practice Group of Stern, Tannenbaum & Bell …
Omar currently handles all corporate and securities matter for issuers and developers seeking financing under the EB-5 program for Mona Shah and Associates, a top 25 EB-5 law firm. He offers clients years of experience in securities law and corporate law, including SEC compliance, corporate finance, and mergers and acquisitions. Omar is also able to draw on his experiences at major federal regulatory agencies and bodies.
Omar earned his J.D. at the University of Virginia where he was a member of the Tax Review, and his Master of Laws in Securities and Financial Regulation at the Georgetown University Law Center. He earned his B.A. in Economics at Georgetown University with minors in Computer Science and Arabic, and has passed the Chartered Financial Analyst Level I exam.
Omar currently handles all corporate and securities matter for issuers and developers seeking financing under the EB-5 program for Mona …
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About Proskauer Rose LLP
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About Sadis & Goldberg LLP
Sadis & Goldberg LLP is a leading New York based law firm focused on delivering sophisticated and creative legal solutions in a highly professional manner. The Firm is internationally recognized for its financial services practice that consists of representing several hundred investment advisers and related investment entities (including hedge funds, private equity funds, commodity pools, and venture capital funds). Similarly, the Firm provides regulatory and compliance advice and representation in connection with SEC enforcement proceedings. Notwithstanding the emphasis on the financial services industry, the Firm also provides a full range of tax, litigation, real estate, intellectual property and corporate services to its clients.
About Stern Tannenbaum & Bell LLP
STERN TANNENBAUM & BELL LLP was founded in March 2007 with the goal of providing the highest quality legal services in the most efficient and cost-effective way. The Firm’s smaller, more collegial setting allows them to provide individualized attention to all clients at sensible rates.
The Firm is comprised of highly sophisticated, experienced attorneys, trained at some of the nation’s premier law firms. They are committed to hard work and exacting standards.
There is no typical client of the Firm. Rather, their client base is large and varied, operating in widely diverse geographic areas and industries. What their clients do have in common is the Firm’s dedication to understanding each client’s business and needs.
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About Mona Shah & Associates
Mona Shah & Associates is highly regarded in the EB-5 field and boasts a special edge in their EB-5 practice. MSA have assisted many investors and EB-5 Projects and Regional Centers in navigating this complex, nuanced, and constantly changing area of immigration law. The legal team at MSA continuously follow the frequently changing interpretations of USCIS’ EB-5 regulations and policy guidelines as well among others. We regularly update our blog, commenting on newsworthy items. Likewise, our China practice group also provides advice to US-based clients who seek to access the Chinese capital market.