SEC Announces 2026 Exam Priorities: What Every Adviser Needs to Know

The U.S. Securities and Exchange Commission (the “SEC”) Division of Examinations (the “Division”) released its 2026 examination priorities, giving financial institutions, including investment advisers, guidance on what to expect during a regulatory examination in 2026. Stark & Stark helps dozens of clients prepare for and successfully complete Federal and State regulatory exams every year.
The following areas will be prioritized during 2026 investment adviser exams:

Adherence to Fiduciary Standards of Conduct

Advisers have a fiduciary duty of loyalty and care to act in their clients’ best interests. The Division will place particular emphasis on adequate disclosure of conflicts of interest, provision of impartial investment advice, consideration of investment costs and objectives, and best execution practices.

Additionally, the Division indicated that it will focus on alternative investments and complex investments, while also reviewing consistency of investment recommendations to older investors and private funds.

Finally, the Division announced focuses on advisers that are dually-registered as broker-dealers, advisers utilizing third-parties to access clients’ accounts and related cybersecurity practices, and advisers that have merged with or been acquired by existing advisory practices.

Effectiveness of Advisers’ Compliance Programs

To evaluate the effectiveness of advisers’ compliance programs, the Division announced it will focus on reviewing the core areas of advisers’ compliance programs including marketing, valuation, trading, portfolio management, disclosure and filings, and custody.

Additionally, the Division will review advisers’ policies and procedures to ensure they are adequately implemented and enforced, and whether disclosures address fee-related conflicts of interest. Finally, the Division will evaluate compliance with filing requirements for Schedules 13D and 13G, Form 13F, Form 3, Form 4, Form 5, and Form N-PX.

Never-Examined Advisers and Recently Registered Advisers

The Division again announced that it will prioritize examinations of never-examined advisers, with an emphasis on recently registered advisers.

Risk Areas

The Division highlighted several areas it believes present higher risks to various financial institutions.

1. Cybersecurity: The Division will continue to review advisers’ practices to prevent interruptions to mission-critical services and to protect investor information, records, and assets. Additionally, the Division will examine advisers’ procedures and practices to assess whether they reasonably manage information security and operational risks. There will be particular attention on firms’ policies and procedures, governance practices, data loss prevention, access controls, account management, and responses to cyber-related incidents, including those related to ransomware attacks.
2. Regulation S-ID: The Division will focus on the advisers’ development and implementation of a written Identity Theft Prevention Program that is designed to detect, prevent, and mitigate identity theft in covered accounts. Specifically, the Division will assess whether the policies (1) are reasonably designed to identify and detect red flags, and (2) include firm training on identity theft prevention.
3. Regulation S-P: Prior to the compliance date, the Division will engage advisers during examinations about their progress in preparing an incident response program reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information. After the compliance date, the Division will examine whether advisers have maintained policies and procedures in accordance with the regulation. The deadline to implement an incident response program is December 3, 2025 for advisers with $1.5 billion or more in assets under management, and June 3, 2026 for advisers with under $1.5 billion in assets under management. Stark & Stark can assist with preparing an incident response program.
4. Emerging Financial Technology: The Division will focus on advisers’ use of automated investment tools, artificial intelligence, and trading algorithms. With respect to AI, the Division will review the accuracy of representations regarding AI capabilities and will assess whether advisers have implemented policies to monitor and supervise their use of AI technologies. Stark & Stark can assist with preparing an AI usage policy.

The attorneys at Stark & Stark help dozens of advisers across the United States to prepare for and successfully complete Federal and State regulatory exams. When regulators call to announce an exam, your compliance team of attorneys, paralegals, and legal assistants will be with you every step of the way. Click here to review the full release.