SEC Releases 2027 Examination Priorities

In late October, the Examination Division of the Securities and Exchange Commission released its fiscal year 2027 Exams Priorities. According to a Dechert client alert, the Commission “remains focused on whether investment recommendations, disclosures and compliance practices reflect the risks and operations of their actual businesses.” Other areas of interest include conflicts of interest, valuation processes, and higher-risk exchange traded products.

Specifically, the exam priorities for registered investment companies include a focus on funds that hold less liquid and illiquid assets, the valuation of private assets, as well as certain products and novel strategies like BDCs and inverse and leveraged ETFs. In addition, the Examinations Division will also review funds relying on exemptive orders and the fund’s compliance with the order. In their client alert, Dechert notes “Funds and their advisers should consider whether valuation practices, redemption arrangements and investor disclosures appropriately reflect portfolio liquidity and leverage risks and whether applicable exemptive order conditions are implemented by appropriate policies and incorporated into operational controls.”

Click here to view the Division of Examinations 2027 priorities.

Click here to read a Dechert client alert covering the priorities.