The compliance date for the marketing rule was Nov. 4, which means the division will now “evaluate whether RIA has adopted and implemented written policies and procedures reasonably designed to prevent violations” of the rule, says The report.
The division will also review whether registered investment advisers comply with the rule’s substantive requirements, the report says, including the requirement that RIAs “have a reasonable basis to believe they will be able to substantiate claims.” statements of material fact and advertising requirements on performance, testimonials, endorsements and third-party ratings.”
In environmental, social and governance investing, the division will focus on ESG-related advisory services and fund offerings, as well as assessing the appropriate labeling of ESG products and addressing the issue whether recommendations for these products are in the best interests of investors.
Regarding crypto and emerging technologies, the division said it will review all brokers and RIAs that use new technologies, such as mobile broker apps or RIAs that provide automated digital investment advice. The division also expressed a particular interest in crypto, pointing to recent events.
“Given the disruption caused by the recent financial difficulties of crypto asset market participants, the division will continue to monitor and, as appropriate, conduct reviews of potentially impacted or affected registrants,” the report said.
ESG and crypto assets were also review priorities for 2022.
In addition, the division said it will continue to focus on RIAs to private funds. The reviews will examine an RIA’s fiduciary duty and assess risks, including conflicts of interest, compliance programs, fees and expenses, custody, the agency’s new marketing rule, and use alternative data.
“In an era of growing markets, changing technologies and new forms of risk, our review division continues to protect investors,” SEC Chairman Gary Gensler said in a press release on Tuesday. “By executing the 2023 priorities, the division will help ensure compliance with federal securities laws and rules.”
Other priorities include ensuring compliance with the Best Interests Regulations, Fiduciary Duty and CRS Form; as well as reviewing practices to protect investor information and prevent disruption of critical services.
