SEC’s Division of Examinations Halloween Treat–2025 Priorities

By: Jennifer Klass, Lance Dial, and Pablo Man

In order to discourage investment advisers, broker-dealers and investment companies from engaging in any “tricks,” the SEC’s Division of Examinations has published a treat, in the form of its 2025 Examination Priorities (the Priorities). This publication, an annual event since 2013, provides market participants with insight into what the Division of Examinations will focus on in the coming fiscal year.

All told, the 2025 version of the Examination Priorities has not changed very much from 2024. For advisers, this means a continued focus on fiduciary duty, complex products, unconventional strategies, financial conflicts of interest, accuracy of fee calculations, and compliance program implementation. For broker-dealers, the examination staff will continue to focus on compliance with Regulation Best Interest, including account type recommendations and reasonably available alternatives, and trading practices. Operational resilience, cyber security and anti-money laundering matters remain focus areas for all market participants.

While much remains the same, there were some changes of note. The Priorities did include a specific reference to compliance with recently adopted SEC rules, including the new amendments to Form PF (effective March 2025) and the operational changes and recordkeeping requirements associated with the T+1 conversion.

The Priorities also highlight issues relating emerging financial technologies, including artificial intelligence (AI). Here, the Priorities note a focus on AI-related disclosures, the supervision of the use of AI, including an “in depth” review where AI is integrated into advisory operations such as portfolio management, marketing and compliance. The Priorities also emphasize the Division’s continued focus on AI-washing and its intention to examine “in particular” firms that use digital engagement practices to provide advice or recommendations.

Given this Halloween treat, market participants should expect more of the same examinations from the SEC in 2025, with a focus on compliance with newly adopted rules, as well as continuing priorities reflected in certain rules (like the private fund adviser rules, safeguarding and predictive data analytics) that were either vacated or not adopted.