SEC Outlines 2026 Examination Priorities for Investment Firms

On November 17, 2025, the U.S. Securities and Exchange Commission (SEC) announced its examination priorities for 2026, outlining the focus areas for the Division of Examinations. These priorities aim to enhance compliance among investment advisers, broker-dealers, investment companies, and other market participants. The SEC’s approach marks a shift towards transparency and practical compliance rather than strict enforcement.

Key Areas of Focus for 2026

The SEC’s 2026 priorities emphasize core compliance issues such as fiduciary duties, conflicts of interest, and the implementation of Regulation Best Interest. Investment advisers will be scrutinized on their adherence to fiduciary duties, particularly regarding their investment advice and disclosures to retail investors, including those saving for retirement and older customers. The Division will pay close attention to three types of investment products: alternative investments, complex investments like leveraged ETFs, and products with higher associated costs.

For broker-dealers, the examination priorities concentrate on four key areas: product and investment strategy recommendations, identification and mitigation of conflicts, processes for reviewing reasonably available alternatives, and fulfilling the Care Obligation. Similar to advisers, broker-dealers will face increased scrutiny around recommendations for complex or alternative products.

Compliance with Regulations and Emerging Technologies

The SEC highlighted Regulation S-P as a critical area of risk, especially in light of recent amendments. The Division will evaluate firms’ policies and procedures, internal controls, and governance practices. It will also assess firms’ progress in developing incident response programs to manage unauthorized access to customer information. Once the amendments take effect, compliance with new administrative, technical, and physical safeguards will be closely examined.

The Division’s focus on emerging technologies, particularly artificial intelligence (AI), reflects the growing influence of these tools in the finance sector. The SEC will review how firms utilize AI technologies, automated investment tools, and trading algorithms. Special attention will be given to the accuracy of AI-related disclosures and the adequacy of monitoring policies surrounding these technologies.

In a notable departure from previous years, digital assets and cryptocurrency have not been specifically identified as risk areas in the 2026 priorities. While firms involved in crypto-related activities may still be examined on these operations, the SEC’s stance suggests a more facilitative approach towards innovation in this space.

Private Funds and Registered Investment Companies

Though private funds do not have a dedicated section in the priorities, they are included in various examination areas. The SEC will focus on advisers to newly launched private funds and those advising products that invest in illiquid assets, such as private equity or credit.

The Division also reiterated the importance of compliance programs for advisers as a fundamental part of the examination process. It will evaluate six key areas: marketing, valuation, trading and portfolio management, accuracy of disclosures and filings, custody, and annual reviews. The emphasis will be on whether policies are effectively enforced and whether disclosures adequately address fee-related conflicts arising from account and product compensation structures.

The SEC’s focus on retail investors will continue with increased scrutiny of registered investment companies (RICs), including mutual funds and ETFs. Areas of examination will include fund fees and expenses, portfolio management practices, and the accuracy of related disclosures. Newly registered RICs or those not previously examined will receive particular attention, alongside those involved in mergers or using complex investment strategies.

The SEC’s 2026 examination priorities reflect its commitment to ensuring investor protection and enhancing compliance across the financial sector. As firms prepare for the upcoming year, adherence to these priorities will be crucial for navigating the evolving regulatory landscape.