Reviewing The SEC's Examination Priorities for 2025

The Securities and Exchange Commission’s (SEC) Division of Examinations has outlined its priorities for the 2025 fiscal year. It focuses on areas that may present heightened risks to investors and the integrity of U.S. capital markets. The SEC develops this list of priorities yearly through consultation with other SEC divisions and offices. Past examinations, market events, and conversations with various industry stakeholders also inform the lists. 

The goal of this priorities list is to promote compliance, prevent fraud, and identify risks for each primary industry group. Let’s explore the specific priorities outlined for each key industry group in 2025.

I. Investment Advisers

A. Adherence to Fiduciary Standards of Conduct

The SEC will continue prioritizing investment advisers’ adherence to their fiduciary duties of care and loyalty, which the SEC recently detailed in its June 2019 interpretation. Under the SEC’s interpretation of these duties, advisers must (1) ensure they provide advice in their client's best interest, and (2) mitigate and disclose all material conflicts of interest. Key areas of focus according to the SEC will include:

• Advice on high-cost, illiquid, or unconventional products.
  

• Dual registrants (advisers who are also broker-dealers) and conflicts related to account recommendations (e.g., brokerage vs. advisory).
  

• Advisers’ financial conflicts of interest, especially those involving non-standard fee arrangements.

B. Effectiveness of Advisers’ Compliance Programs

The SEC will continue to scrutinize registered investment advisers’ written compliance programs. Though the SEC has repeatedly emphasized the need for effective compliance programs, specific points of emphasis this year include:

• Evaluation of policies addressing valuation, marketing, trading, and custody.
  

• Special focus on AI integration, independent contractor oversight, and changes in business models; and
  

• Controls related to specific risks such as the valuation of illiquid assets and the use of alternative revenue sources.

C. Advisers to Private Funds

Advisers to private funds will be closely examined, particularly in areas such as:

• Consistency of disclosures with actual practices.
  

• Calculation of fund fees and expenses, especially those involving illiquid assets.
  

• Compliance with newly adopted SEC rules, including Form PF amendments and updated marketing rules.

D. Never Examined or Recently Registered Advisers

The SEC will prioritize looking into newly registered advisers or those that have not been recently examined, ensuring they comply with fiduciary and regulatory requirements.

II. Investment Companies

With respect to registered investment companies, the Division will continue focusing on the following priority areas, particularly related to mutual funds and Exchange-Traded Funds:

• Fund fees, expenses, and the oversight of affiliated and third-party service providers.
  

• Portfolio management and disclosure practices, ensuring consistency between strategies and investor communications.
  

• Funds with exposure to commercial real estate and compliance with new and amended rules.

As with advisers, the Division will examine newly registered or never-before-examined registered funds.

III. Broker-Dealers

A. Regulation Best Interest 

The SEC will continue to look closely at broker-dealers’ practices related to Regulation Best Interest, focusing on whether product recommendations are in the customers’ best interest and how such recommendations are documented. Some areas of focus include:

• Recommendations on crypto assets, structured products, and other complex investments.
  

• Automated tools used for investor recommendations.
  

• Special attention to advice provided to older investors and those saving for retirement.

B. Form CRS

Broker-dealers will also be reviewed for the content and accuracy of their relationship summaries. Examinations will focus on:

• Disclosures about services, fees, and conflicts of interest.
  

• Compliance with Form CRS filing and delivery obligations.

C. Financial Responsibility Rules

Financial examinations will continue to review broker-dealers’ compliance with rules regarding net capital and customer protection, including:

• Internal controls related to accounting practices and financial risk management.
  

• Reviews of operational resiliency programs, especially third-party service oversight.

D. Trading-Related Practices and Services

Broker-dealer trading practices will be examined with emphasis on the following areas:

• Bank sweep programs, fully-paid lending programs, and mobile trading platforms.
  

• Retail equity and fixed-income order execution.
  

• Pre-IPO trading and secondary market sales of private company shares.

In sum, the SEC’s Division of Examinations has developed a comprehensive list of priorities for 2025, identifying key aspects of the investment adviser, investment company and broker-dealer markets. These priorities emphasize the importance of fiduciary standards, compliance programs, and transparency across these three financial institutions. 

To learn more about the SEC’s Division of Examinations and its priorities for 2025, browse through our other posts or our resources page.