The SEC said it would focus on matters relating to retail investors saving for retirement and the SEC followed through with the new exam focus: the ReTIRE Initiative.
We’ve seen this coming. The National Exam 2015 priorities list stated that OCIE will focus on how retail investors at or nearing retirement are being served by investment advisers and broker-dealers.
Unlike some of the past initiatives, this one seems to look in a different direction than private funds. Unless of course the private fund is being marketed to retirement accounts.
(On a side note, I have mixed feelings about the forced acronym for the initiative. I admit that I said the “Never-Before Examined Initiative” lacked pizazz and a snappy title like “presence exam.”)
SEC examiners will be looking for signs of harm to these investors, in particular with retirement accounts, on four areas:
- Reasonable basis for recommendations
- Conflicts of interest
- Supervision of compliance controls
- Marketing and disclosure
These areas are not different or new compared to past initiatives. It just seems the focus is on advice around retired investors and retirement accounts. That may be an interesting challenge if a firm is not tracking the types of accounts.
For private funds, the Form PF asks a breakdown of fund investors in 14 different categories. Retirement accounts is not one of those categories in Question 16. I’m not sure this is a category that many private funds actually track.
Perhaps the focus may be for self-directed IRAs and the risk of fraud seen in other cases for alternative investments.
Sources:
- OCIE announces its new ReTIRE Initiative; will examine select IAs and B-Ds
- So who really thinks the SEC is not focused on elder investors
- The SEC Goes after the Gate Keeper
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