On October 21, 2024, the Division of Examinations of the Securities and Exchange Commission (SEC) released its much-anticipated 2025 examination priorities. This announcement serves as a crucial guide for registered investment advisers, investment companies, and broker-dealers, highlighting areas under scrutiny for the upcoming year. Despite the potential for shifts in focus due to a changing presidential administration, many core enforcement areas are expected to remain consistent.

Key areas of focus include conflicts of interest disclosures, compliance with Regulation Best Interest (Reg BI), cybersecurity, and the growing impact of artificial intelligence and crypto assets. The Division’s emphasis on these areas signals its commitment to maintaining rigorous standards in the financial sector.

Investment Advisers

The Division maintains its tradition of prioritizing examinations for investment advisers who have never been examined, newly-registered advisers, and those not recently reviewed. The focus for 2025 will be on fiduciary standards, compliance programs, and private fund advisers.

Fiduciary Duties

Investment advisers must adhere to fiduciary standards of conduct, acting in the best interests of their clients. The Division will pay close attention to advice on high-cost products, unconventional instruments, and assets sensitive to market changes, such as commercial real estate.

Compliance Programs

Compliance with Rule 206(4)-7 under the Investment Advisers Act of 1940 remains a priority. This includes adopting and implementing compliance policies, designating a chief compliance officer, and conducting annual reviews. The Division will evaluate core compliance areas, including marketing, valuation, and portfolio management.

Broker-Dealers

The SEC has previously taken action against broker-dealers for Reg BI violations and Form CRS obligations. In 2025, these remain top priorities, along with financial responsibility and trading-related practices.

Regulation Best Interest

Broker-dealers must ensure recommendations are in the best interests of their clients. The Division will assess conflict of interest disclosures and practices for identifying, mitigating, and eliminating conflicts.

Form CRS

Broker-dealers are required to provide Form CRS to all retail investors. The Division will review the content of these relationship summaries for accuracy and completeness.

Risk Areas

Cybersecurity, compliance with recent regulatory amendments, financial technologies, and crypto assets are highlighted as presenting the highest risks to investors and markets.

Cybersecurity

The Division will focus on registrant practices to prevent service interruptions and protect investor information, emphasizing policies, governance, and incident response.

Financial Technologies

With the rise of AI, the 2025 priorities emphasize the use of automated investment tools and digital engagement practices. The Division will assess how AI is implemented and monitored.

For more detailed insights, you can refer to the original article by Eric Mikkelson and Carissa Occhipinto at Stinson LLP.

More Articles

Getting licensed or staying ahead in your career can be a journey—but it doesn’t have to be overwhelming. Grab your favorite coffee or tea, take a moment to relax, and browse through our articles. Whether you’re just starting out or renewing your expertise, we’ve got tips, insights, and advice to keep you moving forward. Here’s to your success—one sip and one step at a time!

Top Real Estate Investment Trends for 2025: Expert Insights

As the real estate landscape evolves, strategic investments can make all the difference for stakeholders aiming to maximize returns. Johan Hajji, Cofounder at UpperKey, shares his insights into pivotal trends expected to shape property investment in 2025.

By |February 12, 2025|Categories: Article, Property Investment, Real Estate|Tags: , |0 Comments

The Role of Zoning Regulations in the Housing Affordability Crisis

As the nation confronts the ongoing housing affordability crisis, a key focus has emerged on the role of zoning regulations in either hindering or promoting the construction of affordable housing. These regulations, which dictate land use and building specifics, have come under scrutiny for their potential to either restrict or facilitate housing production.

Real Estate Investment Outlook for 2024: Key Cities and Market Insights

"Despite recent fluctuations, the U.S. housing market continues to be a valuable asset class, with cities across the nation offering promising prospects for those looking to capitalize on economic resilience, job growth, and rental demand."

Key Themes in Commercial Real Estate for 2025: A Tentative Revival

As trust in the market begins to rebuild, a convergence of powerful trends is expected to ignite a strong rebound in transaction volumes, providing a renewed sense of optimism for the industry.

Real Estate Crowdfunding: A New Frontier for Investors

The landscape of real estate investing is undergoing a remarkable transformation, thanks to the rise of real estate crowdfunding platforms. As highlighted in a recent NerdWallet article, these platforms are democratizing access to real estate investments, once the exclusive domain of affluent investors.

By |February 11, 2025|Categories: Article, Crowdfunding, Real Estate Investing|Tags: , |0 Comments

A 22-Year-Old’s Journey to $103K in Real Estate

Meet Anna, a real estate agent and mortgage loan originator, who smartly positioned herself with a top-producing luxury real estate team, earning $103,000 in her first year.