Regulators’ hot-button issues in 2018

Q: What will regulators focus on next year?

A: While it’s always a dicey proposition to try and play fortune teller, the good news is that I don’t have to: Each January, the SEC and FINRA issue exam priorities letters which tell you exactly what issues are of concern to the regulators in the year ahead.

Looking back on 2017, we see that some of the same priorities rolled over from 2016. I would anticipate many of the same items will appear on 2018’s exam priorities letters. FINRA, in particular, was focused on recidivist brokers, sales practice abuses (particularly with seniors), social media, cybersecurity and best execution to name just a few.


With that said, if I look into my crystal ball, I would expect that, in light of this past year’s disastrous hurricanes and wildfires, disaster recovery and business continuity may be hot topics.

I would also anticipate that the regulatory authorities will continue their information-gathering efforts regarding cryptocurrencies, blockchain and initial coin offerings as I think there are significant challenges ahead in connection to that market. You might find the SEC doing sweep exams to gather more information like they’ve been doing in connection with cybersecurity.

Finally, with big names such as Paul Manafort being in the spotlight for money-laundering charges, I can see anti-money laundering rules taking a more prominent role next year.

Advisors can’t assume that exam priorities letters don’t affect them. While many issues that arise in the exam priorities letters are firm-level requirements, certain issues like AML can have implications for individual reps when they pertain to things like the “know your customer” requirements.


Article Published by Financial Planning December 26, 2017

Written by Alan J Foxman