SEC Chairman Jay Clayton Notes Increase in Adviser Exams and Commitment to Expanding Technology

June 29, 2017

On June 27, 2017, U.S. Securities and Exchange Commission ("SEC") Chairman Jay Clayton presented testimony on the Fiscal Year 2018 Budget Request. During Chairman Clayton’s testimony, he emphasized the SEC’s commitment to protecting the investing public, maintaining fair markets, and facilitating capital formation.

Chairman Clayton also noted that the SEC is on track to increase investment adviser examinations by 20%. These examinations will focus not only on compliance with SEC regulations, but also on cybersecurity guidance issued by the agency.

In addition, Chairman Clayton noted in his testimony that the SEC’s commitment to technology initiatives will include:

  • Enhancing financial data analytics tools for detecting potential fraud or suspicious behavior;
  • Improving the SEC examination program by using risk assessment and surveillance tools to help identify high-risk areas that may require further examination;
  • Increasing cybersecurity investments, particularly around strengthening capabilities for monitoring and avoiding advanced persistent threats;
  • Enhancing support systems for the SEC enforcement program, including algorithms for detecting potential insider trading and manipulation;
  • Improving public access to data from the SEC’s EDGAR electronic filing system, including improving data quality;
  • Investing in business processes automation and enhancements; and
  • Retiring legacy systems.

What You Should Know
As the SEC continues to emphasize examainations of investment advisers as well as build out their technology infrastructure, they will have the tools to help them conduct more efficient examinations, identify suspicious activity, and further streamline SEC processes.

If your firm is SEC-registered, you should review your firm’s compliance policies and procedures to ensure they meet SEC requirements in the event of an examination.

In addition, you should assess your firm’s technology infrastructure capabilities for monitoring financial data, managing data storage and reporting, monitoring compliance and regulatory concerns, and managing cybersecurity safeguards and protocols.

How ACA Can Help
ACA partners with clients to help them meet regulatory obligations as well as improve their compliance and technology operations. ACA offers several solutions that provide clients with the ability to:

For more information, please contact Jeff Morton at ACA Compliance Group, Michael Lehman at ACA Technology Solutions, Henry Lindemann at ACA Aponix, or your regular ACA consultant