U.S. SEC Division of Examinations Announces 2026 Exam Priorities

On November 17, 2025, the U.S. Securities and Exchange Commission (SEC or Commission) Division of Examinations (Division) published its annual examination priorities (Priorities)¹ outlining areas of perceived risk and topics that the Division plans to focus on in the new fiscal year. These are the first exam priorities issued under Chairman Paul Atkins, and they frame the Division’s work against a backdrop of tighter resources and a renewed focus on operational effectiveness. The leadership message introducing the Priorities also highlights the need to adapt to innovation and evolving market forces and to facilitate capital formation.

Although the message emphasizes “exploring ways to empower registrants and investors alike,” substantively, many core themes remain consistent with past years. While not an exhaustive list of all the items that the Division will focus on in exams, the Priorities underscore the Division’s continued focus on registrants’ standards of care, information security and operational resiliency (including implementation of the 2024 Regulation S-P amendments, regarding privacy and safeguards), and the risks associated with alternative and complex products.

This Sidley Update provides a summary of upcoming examination focus areas across investment advisers, investment companies, broker-dealers, and other market participants and broadly addresses relevant risk topics. Registrants should consider these themes as they review and refresh their compliance programs and exam readiness efforts for the coming year.

Our Take

• The 2026 Priorities are the first issued under Chairman Atkins. In the leadership message, the Division acknowledges that it is operating with fewer resources and a reshaped workforce and describes an “operational effectiveness” framework designed to drive greater consistency and coordination across the exam program.
• The Division continues to focus on adviser’s fiduciary duties and broker-dealers’ Regulation Best Interest duties (including conflicts and best execution), valuation and liquidity of illiquid assets, fees and expenses, and the risks posed by alternative and complex products, particularly for retail and retirement investors. Exchange-traded funds (ETFs) investing in less-liquid assets, making heavy use of derivatives or delivering inverse or leveraged returns, are called out multiple times, for example.
• There is a continued emphasis on implementation of existing requirements. Even as the Division highlights staffing and operational considerations, examiners will still expect firms to show concrete progress on implementing existing rules and guidance. For many registrants, that will include preparations for the Regulation S-P amendments, ongoing compliance with Regulation S-ID (identity theft red flags), and, for registered investment companies, the amended Names Rule. All registrants should continue to pay attention to the Division’s risk alerts and other published exam observations.
• There are some shifts in topical emphasis from the 2025 priorities, including the absence of cryptoassets as an exam focus area. This change is particularly notable in the current policy environment. While there is not a dedicated section about advisers to private funds in the Priorities, the Priorities specifically address private credit, private funds with investment lockup for extended period, side-by-side management of private funds and separately managed accounts, and new private fund advisers. The Priorities also specifically identify complex or novel strategies, illiquid investments, and leverage vulnerabilities as areas of interest in the examinations of registered investment companies. 

Investment Advisers

Adherence to Fiduciary Standards of Conduct

Examining advisers’ adherence to their duty of care and duty of loyalty remains a core priority, particularly for services provided to retail investors. Staff will review investment advice and related disclosures for consistency with fiduciary obligations, including how advisers account for costs, objectives and characteristics (including any “unusual or special features”), liquidity, risks and potential benefits, volatility, likely performance across market conditions, time horizon, exit costs, and best execution. 

The Priorities highlight continued scrutiny of alternative investments (e.g., private credit and private funds with extended lockups), complex investments (including certain ETFs), and higher‑cost products. Expect heightened attention to recommendations to older investors and those saving for retirement. The Division will also focus on advisers that advise both private funds and separately managed accounts or newly registered funds (including conflicts associated with allocations), advisers to newly launched private funds, recommendations of products sensitive to market volatility, and advisers new to advising private funds. 

The Priorities also identify advisers and business practices that may create additional risks or conflicts of interest, providing as examples dual registrants and advisers using third parties to access client accounts and data. In an addition to priorities from prior years, the staff will also scrutinize advisers that have recently undergone a merger with or have been acquired by another adviser.

Effectiveness of Advisers’ Compliance Programs

The Division remains focused on advisers’ compliance programs, including policies related to marketing, valuation, trading, portfolio management, disclosure and filings, custody, and whether their policies and procedures appropriately address and monitor conflicts of interest. The Division identifies other particular areas of examination focus including whether policies are implemented and enforced and whether disclosures address fee-related conflicts. The Priorities also acknowledge that the focus of an examination may shift depending on an adviser’s business and specifically reference the need for those with activist engagement practices to make timely and accurate filings, including those required under the Exchange Act of 1934.

Never-Examined Advisers, Recently Registered Advisers, and Advisers Not Recently Examined

Advisers that have never been examined will continue to be a priority for the Division, with a focus on newly registered advisers and advisers that have undergone significant business change.

Investment Companies

The Division continues to focus on examinations of registered investment companies (RICs) due to their importance to retail investors. 

Examinations by the Division will focus on compliance programs, disclosures, and governance practices. The Division has highlighted focus areas of fund fees and expenses (and any waivers or reimbursements) and portfolio management practices. As with examinations of advisers, the Division will look for consistency between claims about investment strategies, filings and marketing materials, and what the RIC actually practices. The Division is also likely to prioritize RICs with complex or novel strategies (including those with significant exposure to illiquid assets or leverage). Examinations of RICs will come from two directions: (1) examining the funds themselves and (2) examining the broker-dealers that recommend the funds. 

Broker-Dealers

Broker-Dealer Financial Responsibility Rules

The Division has indicated that broker-dealer examinations will continue to focus on compliance with the net capital rule and the customer protection rule, along with related internal processes, procedures, and controls. 

Other areas of focus in 2026 will include the adequacy of credit, market, and liquidity risk management controls, particularly the effectiveness of controls aimed at managing stress events. Additionally, firms should expect continued evaluation of cash sweep programs and prime brokerage activities, with attention to concentration, liquidity, and counterparty credit risks.

Broker-Dealer Trading-Related Practices and Services

The Division will continue to focus on equity and fixed-income trading practices, including broker-dealer activities associated with extended-hours trading and municipal securities. Examinations will also evaluate firms’ order-routing and execution practices, including compliance with best execution obligations, the valuation of illiquid instruments (e.g., variable rate demand obligations, other municipal securities, and nontraded real estate investment trusts), and required order routing and order execution disclosures, including those mandated under Rule 605 of Regulation NMS. Compared with the 2025 Examination Priorities, the recently announced priorities omit examination focus on offerings made through fully paid lending programs or mobile apps/online platforms as well as trading in pre-IPO companies and private company shares in secondary markets.

With respect to Regulation SHO, the Division will assess whether firms’ reliance on the bona fide market-making exception is appropriate, including whether quoting activity is conducted away from the inside bid/offer. Notably, the Division announced potential examining of alternative trading systems for compliance with requirements to maintain written safeguards protecting subscriber confidential information, alignment with Form ATS-N disclosures, and risk controls — areas that were not included in the 2025 Examination Priorities.

Retail Sales Practice, Including Compliance With Regulation Best Interest

The Division will continue to prioritize broker-dealer compliance with Regulation Best Interest (Reg BI), which governs recommendations to natural persons, with a particular focus on firms’ product and account recommendations to retail investors. Examinations will review:

- product and investment strategy recommendations

- firms’ processes for identifying and mitigating conflicts of interest, including those arising from recommendations of accounts, rollovers, and limited product menus

- firms’ processes for reviewing reasonably available alternatives when making recommendations

- how firms satisfy the Care Obligation, including their assessment of customer investment profiles and product and account features

Examinations will have a particular focus on recommended products that are complex or tax-advantaged. Examinations may also include review of recommendations involving the movement of an investment to a substantially similar product, the opening of different account types, and those made to older investors or individuals saving for retirement or education.

In addition, examinations may focus on broker-dealer supervision of sales practices at branch offices and the accuracy and completeness of Form CRS disclosures. Compared to the 2025 Examination Priorities, the new priorities omit cryptocurrency assets, unregistered products, and the use of automated tools to make recommendations as Reg BI focus areas.

Clearing Agencies

As in previous years, the Commission will continue to conduct annual examinations of each systematically important clearing agency for which the Commission serves as the supervisory agency, pursuant to Title VIII of the Dodd-Frank Act. Identified areas of focus for these examinations include core risks, processes, and controls as well as the nature of operations and assessment of financial and operational risk. Examinations of other registered clearing agencies that are not designated as systematically important will focus on compliance with the Commission’s Standards for Covered Clearing Agencies. Generally, examinations of both types of clearing agencies are undertaken to assess risk management framework, remediation of prior deficiencies, and other risk areas. Security-based swap data repositories and entities exempt from clearing agency registration are also examined.

Risks Areas Affecting All Market Participants

Information Security and Operational Resiliency 

Cybersecurity

Cybersecurity remains a perennial priority focus area affecting multiple market participants, including broker-dealers and investment advisers. Examiners will continue to review registrant practices to prevent interruptions to mission-critical services and to protect investor information, records, and assets from cyber and other operational risks, including ransomware and other cybersecurity attacks, dispersed operations, weather-related events, and geopolitical concerns. The Division is expected to assess governance and risk-assessment processes, data loss prevention and access controls, incident response and recovery planning, and training and awareness around emerging threats, including artificial intelligence (AI)–enabled attacks.

Regulation S-ID and Regulation S-P

The Division will focus on compliance with Regulations S-ID and S-P, including the newly adopted Regulation S-P amendments. For Regulation S-ID, examiners will review whether identity theft prevention programs are appropriately designed and implemented, including how firms identify covered accounts, detect and respond to red flags, and train personnel. Leading up to the compliance dates for the Commission’s Regulation S‑P amendments, the Division will use examinations to assess firms’ progress in preparing incident‑response programs reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information and after those dates will examine whether firms have developed, implemented, and maintained policies and procedures that provide appropriate administrative, technical, and physical safeguards consistent with the rule’s new requirements.

Emerging Financial Technologies

The Division will continue to focus on registrants’ use of emerging technologies, including automated tools, AI, algorithms, and alternative data. As with other focus areas, the Division will review registrant disclosure for accuracy and policies and procedures to monitor and/or supervise their use of AI.

Cryptoassets

One of the more notable changes in the 2026 Priorities is what is not discussed: Unlike in some recent years, the document does not identify cryptoassets or crypto-related products as a standalone examination priority. That omission is particularly striking in the current policy environment and the broader debate around recalibrating the SEC’s approach to digital assets. 

Market participants should not assume, however, that crypto-related activities are outside the Division’s focus. To the extent registrants are involved in offering, recommending, trading, or providing custody or other services with respect to crypto-related products, we expect Division staff to continue to assess how those activities fit within existing standards of conduct, disclosure, custody, and operational resiliency frameworks, even if they are no longer highlighted as a discrete priority in the Priorities.

Regulation Systems Compliance and Integrity (SCI)

The Division will continue to evaluate policies and procedures of SCI entities, including whether the policies and procedures of SCI entities are reasonably designed to secure the SCI systems and manage third-party vendor risk.

Anti-Money-Laundering (AML)

The Division will continue to focus on AML programs and review whether broker-dealers and certain RICs are appropriately tailoring their AML program, conducting independent AML testing, establishing an adequate customer identification program, and meeting obligations for filing suspicious activity reports. As expected, with the AML rule amendments for registered investment advisers delayed until January 1, 2028, registered adviser programs are not discussed in the Priorities.