SEC Division of Examinations’ guidelines for 2021

  • Fiduciary duties, Rule 606 and SCI: The potential impact of the pandemic on municipal advisers and their clients would also be examined, as would the ability of these advisers to fulfil their fiduciary duties. Broker-dealer reviews would assess whether firms are following the recently amended Rule 606 on order-routing disclosure. The Division will examine clearing agencies on governance, compliance and legal matters, and on back-testing, the effect of LIBOR transition and cybersecurity. These reviews would determine whether firms are following the policies and protocols mentioned by the Systems Compliance and Integrity (SCI) regulation. Focus areas would be IT governance, IT asset management, and cyber threat management/incident response including usage of cloud services.
  • Transfer agencies: The Division will assess whether the transfer agents are able to perform their core functions properly — these included the timely turnaround of items and transfers, recordkeeping and record retention, and safeguarding funds and securities. It would check whether they follow the respective exchange’s rules and federal securities laws or the guidelines set by FINRA. It would also check the effectiveness of the policies, procedures and controls of the Municipal Securities Rulemaking Board (MSRB).
  1. Maintain reasonably established written policies and procedures
  2. Ensure the adequacy of resources and technology investment to strengthen compliance functions
  3. Correct the review deficiencies observed either by the internal audit function or by the regulator, to demonstrate the organisation’s commitment to compliance practices
  4. Evaluate the effectiveness of information and cybersecurity policies
  5. Monitor customer on boarding and AML programmes
  6. Assess the impact of any foreign regulations governing your organisation
  7. Seek expert advice if you see the need to re-evaluate your organisation’s practices in line with the examination

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/