New SEC Program Will Examine Financial Firms and Their Retirement-Planning Guidance

The Securities and Exchange Commission said it would perform a number of exams on financial advice firms as part of its plans to more closely examine the guidance that investors are getting as they plan for retirement. The regulator’s new program is called the Retirement-Targeted Industry Reviews and Examinations Initiative. The SEC’s Office of Compliance Inspections and Examinations will conduct exams. OCIE is responsible for more than 10,000 advisory firms and 4,500 brokerage firms.

Areas of scrutiny will include firm oversight and investment sales processes and procedures, as well as the areas where retail investors seeking to save for retirement may be at risk of sustaining financial losses. The SEC wants to look at whether the compensation provided to advisers establishes conflicts of interest and how firms deal with this.

The regulator also wants to examine the marketing material provided to customers and whether they are accurate, as well as if financial advisers are conducting enough due diligence on investments. Marketing collateral will be checked for accuracy, including making sure documents disclose the necessary information and are not misleading or contain omissions. The Commission will also study specific recommendations that are being made to clients.

In its alert about the initiative, the SEC acknowledged that a lot of retail investors have become more dependent than ever on their own investments to support them during retirement. OCIE will look at the complex and changing factors that investors deal with when deciding where to invest their money, including the wide variety of investments that are made available in this constantly changing market environment. The regulator will also study registrant sales, and disclosures.

The Commission wants to make sure that firms are adequately supervising staff to ensure that they are in compliance with the laws. Firm procedures and systems will also be examined. Advisers and brokers with faraway and/or multiple branch offices may also receive closer scrutiny.

If you are a senior investor or someone you love is one and you believe the financial losses sustained are because of bad or inappropriate investment advice from a broker or investment adviser, please contact our senior financial fraud lawyers today.

Retirement-Targeted Industry Reviews and Examinations Initiative (PDF)

SEC Staff and FINRA Issue Report on National Senior Investor Initiative (PDF)

SEC launches compliance review to protect retiree investors, Reuters, June 22, 2015