Key Takeaways From SEC 2026 Examination Priorities
Have You Completed Your Annual SEC Review (Rule 206(4)-7)?
Is your Form ADV Part 2 still compliant with the fiduciary duty?
Three Disputes Cleared From Louisiana Rep’s Records
The Awkward Truth: Why Multi-Owner RIAs Need Outsourced CCO
Quick Summary: What RIAs Need to Know
- Focus on Execution: The SEC is moving beyond "policy on paper" to demand proof of operational enforcement and active monitoring.
- The AI Oversight Mandate: New scrutiny on AI-driven advice, algorithmic accuracy, and "AI-washing" in marketing materials.
- Cybersecurity & Reg S-P: Heightened focus on incident response programs and data loss prevention under amended Regulation S-P guidelines.
- M&A Scrutiny: Firms that have recently merged or been acquired are flagged as high-risk for billing errors and fragmented compliance systems.
- Alternative Investment Risk: Intense review of private credit, illiquid products, and valuation consistency for complex assets.
The Audit Roadmap: Where Examiners Will Dig Deepest This Year
The SEC’s Division of Examinations has released its priorities for fiscal year 2026, signaling a clear shift in focus for registered investment advisers (RIAs). The new agenda emphasizes operational effectiveness and execution—meaning your firm must demonstrate that your policies are actively enforced and monitored.
While core principles remain, this year's priorities highlight specific high-risk areas. If your firm operates in any of the following five domains, expect heightened scrutiny during your next examination.
1. Fiduciary Duties & Conflict Discipline
The foundation of RIA compliance remains the fiduciary duty, with a sharp focus on protecting retail investors and clients saving for retirement. Examiners will go deep into how you manage financial conflicts of interest.
- Complex & Illiquid Products: Expect intense scrutiny on recommendations involving private credit, illiquid funds, or complex products, like leveraged/inverse ETFs and other alternative investments. Examiners will verify that your advice aligns with the client’s objectives, risk tolerance, and liquidity needs and that all associated risks and costs were considered.
- Conflicts Of Interest: The SEC will test whether your firm's advice is impartial. This includes reviews of:
- Best Execution: documentation proving that you sought to maximize value for clients.
- Dual Registrants: conflicts arising from dually-licensed representatives who may have financial incentives to recommend advisory, versus brokerage, accounts.
- Fee-Related Conflicts: disclosures related to account and product compensation structures.
2. The Technology Risk Triad: Cyber, AI, & Data Privacy
Technology-related risk is a multi-layered priority, with specific attention paid to implementing recent regulatory amendments.
- Regulation S-P Compliance: Examinations will assess your progress toward compliance with the amended Regulation S-P, focusing on your firm's ability to detect, respond to, and recover from unauthorized access to or use of customer information. This includes your incident response programs, data loss prevention, and access controls.
- AI & Emerging Technology Oversight: For the first time, the use of artificial intelligence (AI) and automated tools is a central focus. Examiners will check:
- whether the representations your firm makes about its AI capabilities are fair and accurate;
- if the advice generated by algorithms is consistent with your fiduciary duty and the client's investment profile; and
- your controls for monitoring and supervising AI used in both client-facing roles (recommendations) and back-office functions (fraud detection, AML).
- Operational Resiliency: Firms must demonstrate that governance practices and controls are in place to maintain mission-critical services during a significant disruption.
3. Structural & Operational Risk (M&A Scrutiny)
The Division will prioritize examinations for RIAs that pose potential operational risk due to their structural status or recent changes.
- New & Never-Examined Advisers: As in previous years, the SEC continues its “welcome to the neighborhood” exams for newly-registered firms, emphasizing the need to build a robust, tailored compliance program, from day one.
- Mergers & Acquisitions (M&A): The SEC is specifically flagging firms that have recently merged, consolidated, or been acquired. Consolidation often creates compliance complexities, such as billing errors, inconsistent disclosures, outdated advisory agreements, and fragmented operational systems. Examiners will look for gaps in the integration process.
- Compliance Program Effectiveness (Rule 206(4)-7): Examinations will routinely assess your annual compliance review to ensure that it’s thorough and documented and that identified deficiencies were actually corrected. Expect examiners to request evidence of implementation, not just policy drafts.
4. Alternative Investment & Private Credit Focus
While private funds no longer have a dedicated header, risks associated with illiquidity and valuation remain a top concern, especially as alternative strategies become more available to retail investors.
- Private Credit & Alternative Strategies: Examiners will scrutinize advisers to funds with alternative investment strategies, particularly private credit, extended lock-up periods, and complex financial structures.
- Valuation: Valuation practices for hard-to-value or illiquid assets (such as commercial real estate or thinly traded securities) will be reviewed to ensure consistency, discipline, and accurate reporting.
- Third-Party Access: Advisers that utilize third parties to access client accounts are also under the microscope, with examiners focusing on whether security controls are sufficient to protect client assets and data.
The Bottom Line: Execution Is The New Documentation
The message from the SEC is clear: compliance is now about demonstrating action. It is no longer enough to have a policy manual—you must prove that your compliance program, including controls for AI and data security, is embedded into your day-to-day operations and functions reliably under pressure.
Advisers should use these priorities as a blueprint for conducting a comprehensive compliance program review well ahead of any regulatory filing or examination.
Engage with our experts today!