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SEC Publishes its 2026 Exam Priorities
On November 17, 2026, the SEC’s Division of Examinations (“EXAMS”) released its 2026 Examination Priorities. Under this new administration, the priorities are shorter and more conventional. Even so, they include several important takeaways, with particular attention on the same kinds of fiduciary issues that were focus areas in the previous administration.
Takeaways:
- A More Measured Approach?: The preamble to the priorities seems to signal that senior management plans to encourage a more collaborative approach to examinations facilitating more open discussions between registrants and exam staff. This may be challenging to implement given the long tenure and established work habits of most examiners. Nevertheless, we anticipate a reduction in the total number of examinations conducted, a consequence of ongoing staffing limitations. Finally, we foresee an increased utilization of non-enforcement tools by the Commission, such as guidance and risk alerts. We anticipate a corresponding decrease in the number of open investigations originating from examinations, however, the practices surrounding deficiency letters detailing compliance violations are not expected to change significantly.
- Key Priorities Include:
- Fiduciary duty and alternative investments: The first priority identified this year is compliance with fiduciary standards of conduct, with specific attention to alternative investments. This is notable as the first priority tends to encapsulate the most important message the Commission wants to send. As we describe below, examinations in this area will likely concentrate on conflicts of interest, including those related to fees and expenses.
- Priorities implicating democratization of alternative investments: Several priorities focus directly on the continuing trend toward the democratization of alternative investments, including the growth of complex products such as ETFs and closed-end funds, as well as advisers to private funds that also manage separately managed accounts or newly registered funds. Examinations in this area are expected to assess issues such as potential favoritism in investment allocations and cross fund transactions, which may have implications for valuation practices, fees and expenses, allocation methodologies, and compliance with applicable Investment Company Act rules.
- Compliance programs: As is current practice, most examinations will emphasize the effectiveness of core compliance functions, including marketing, valuation, trading, portfolio management, disclosures and regulatory filings, Regulation S-P, and custody.
Key Priorities Summary:
| Priority | Description | Who Might Be Selected | Potential Exam Focus Areas |
|---|---|---|---|
| Adherence to Fiduciary Standards of Conduct | Designed to review investment advice and related disclosures provided to clients for consistency with their fiduciary obligations. | * Alternative investment managers. * Managers with complex product offerings. * Advisers who manage separate accounts or RICs side-by-side with private funds. * Never before examined advisers. | * Fees including post commitment management fees for private equity. * Investment allocation, especially when a RIC or an affiliate account is involved. * Cross fund transactions. * Valuation, especially in cross-fund transactions. * Vertical integration. |
| Effectiveness of Advisers’ Compliance Programs | Focus on the evaluation of advisers’ 206(4)-7 compliance programs including the compliance manual annual review, and compliance program execution. | * Never before examined advisers. * Advisers recently completing a merger. * Advisers managing retail products side-by-side with private funds. | * Annual reviews. * Enforcement of compliance manual and desktop policies. * Disclosures around fee-related conflicts, with a focus on conflicts that arise from account and product compensations structures. * Regulatory filings. |
| Investment Companies | General focus on investment companies including ETFs and mutual funds. | * RICs undertaking mergers or similar strategies. * RICs utilizing complex strategies including BDCs, Tender Offer Funds, Interval Funds. * RICs employing high leverage. * RICs managed side-by-side with private funds. | * Fees, expenses and associated waivers. * Marketing materials. * Disclosures about investment strategy, approach and risk. * Names rule. |
| Information Security and Emerging Technology | Includes reviews of cybersecurity practices, cyber disclosures, AI and other emerging technologies. | * Advisers advertising use of AI. * Advisers who have experienced a cyber breach. * Advisers advertising algorithmic investment advice. | * Compliance with Reg S-P. * Cybersecurity policies and procedures. * Cybersecurity disclosures. * AI risk mitigation procedures including verifying AI accuracy, fraud prevention and MNPI control. |
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