SEC 2025 Exam Priorities: Compliance Strategies for Success

Understanding the SEC’s 2025 Examination Priorities

On October 21, 2024 the Securities and Exchange Commission’s (SEC) Division of Examinations released their comprehensive 2025 Examination Priorities, developed through extensive consultation with other SEC divisions and informed by market events and industry feedback. The exam priorities present new challenges and opportunities for financial firms, signaling significant shifts in compliance requirements and enforcement strategies. Financial institutions must understand and adapt to these priorities to maintain regulatory compliance and protect their operations. This guide examines the SEC’s 2025 examination priorities and provides practical steps for compliance success.

The Division has identified four primary risk areas that will shape their examination approach:

1. Information security and operational resiliency
2. Crypto assets and emerging financial technology
3. Regulation systems compliance and integrity
4. Anti-money laundering (AML) compliance

The examination scope encompasses six distinct market participants: investment advisers, investment companies, broker-dealers, self-regulatory organizations (SROs), clearing and custodian agencies, and other market participants including municipal advisors and transfer agents.

New Areas of Focus in 2025

While maintaining continuity with previous priorities, the 2025 framework introduces several notable additions. The Division has expanded its focus on emerging technologies, particularly the integration of artificial intelligence (AI) in advisory operations, portfolio management risks, and compliance processes.

New emphasis areas include:

• Oversight of illiquid and difficult to value assets
• Enhanced scrutiny of complex financial products
• Increased attention to commercial real estate exposure
• Strengthened vendor supervision requirements
• Review of affiliated service provider relationships

Impact on Market Participants

The examination priorities provide focus areas for different market participants:

Investment Advisers:  Fiduciary duty compliance, fee calculations, AI Integration

Broker-Dealers: Regulation Best Interest, financial responsibility rules, trading practices

Investment Companies:  Fund governance, investor disclosures, SEC reporting agency

Clearing Agencies:  Systemic importance reviews, operational resilience

The Division will maintain its practice of prioritizing examinations of newly registered firms and those that haven’t been examined for several years. Particular attention will be given to firms serving retirement investors and those handling complex or high-cost products.

For cybersecurity and information security, firms must demonstrate robust policies covering data loss prevention, access controls, and incident response capabilities. The Division will also scrutinize firms’ compliance with Regulation S-ID and Regulation S-P, particularly focusing on the protection of customer records and information.

Preparing Your Firm for SEC Examinations

Preparing for SEC examinations requires a proactive and systematic approach that goes beyond basic compliance. With the regulatory landscape becoming increasingly complex, firms must develop comprehensive strategies to ensure they’re ready for regulatory scrutiny at any time.

Conducting a Gap Analysis

A thorough gap analysis forms the foundation of examination preparedness. This process involves evaluating your current compliance framework against the SEC’s 2025 exam priorities and identifying areas that need enhancement. Consider these key components:

Regulatory Requirements:  Your firm’s current compliance status with new and existing regulations

Internal Controls:  The effectiveness of your firm’s existing control mechanisms

Risk Management:  Conduct an assessment of potential vulnerabilities

Technology Systems:  Evaluate the adequacy of current tech infrastructure

Documentation:   Determine the completeness and accessibility of required records

Updating Policies and Procedures

Your policies and procedures must reflect both current practices and regulatory expectations. Key focus areas should include:

• Customizing off-the-shelf policies to match your specific business model
• Implementing robust review and approval processes for material changes
• Establishing clear protocols for periodic updates
• Creating audit trails for policy modifications
• Developing implementation timelines for new requirements

Targeted Staff Training

Effective staff training is crucial for maintaining a strong compliance culture. Begin by identifying knowledge gaps through assessments and develop targeted training programs. Focus on practical application rather than theoretical knowledge, using real-world scenarios and case studies.

Training should cover:

1. Role-specific compliance responsibilities
2. New regulatory requirements and their impact
3. Internal control procedures and documentation requirements
4. Communication protocols during examinations
5. Response procedures for regulatory inquiries

Enhancing Documentation Practices for SEC Compliance

Strong documentation practices serve as evidence of your compliance efforts and demonstrate operational effectiveness to examiners. Implement a centralized document management system that ensures:

• Consistent formatting and organization of records
• Clear audit trails for all compliance activities
• Regular testing of document accessibility
• Proper retention periods for all records
• Secure storage and backup procedures

Remember to maintain detailed records of all compliance activities, including meeting minutes, training sessions, and policy reviews. Document all remediation efforts promptly, as examiners often review how firms address previously identified deficiencies.

Establish a dedicated team responsible for managing examination documentation and maintaining communication with examiners. This team should regularly review and update documentation procedures to ensure they align with current regulatory expectations and technological capabilities.

Addressing High-Risk Areas in Your Compliance Program

Risk management has emerged as a cornerstone of the SEC’s 2025 examination priorities, with particular emphasis on identifying and addressing high-risk areas within compliance programs. Financial institutions must develop comprehensive strategies to tackle these critical concerns while maintaining operational efficiency.

Cybersecurity and Information Security

The Division of Examinations has designated cybersecurity as a perennial examination priority. Firms must demonstrate robust information security practices across three key dimensions:

1. Data loss prevention and access controls
2. Account management and incident response protocols
3. Third-party service provider oversight

The examination process will scrutinize firms’ operational resiliency, particularly focusing on their ability to prevent service interruptions and protect sensitive information. Special attention will be given to the supervision of technology vendors and sub-contractors.

Emerging Technologies and Digital Assets

The integration of artificial intelligence and digital assets presents unique compliance challenges. The Division will assess firms based on the following risk assessment framework:

AI Implementation:  Accuracy of capabilities and representations

Operational Controls:  Alignment with investor disclosures

Algorithm Oversight: Consistency with investment strategies

Digital Asset Security:  Custody and trading venue due diligence

Mitigating Conflicts of Interest and Upholding Fiduciary Duty

The Division maintains stringent oversight of conflicts of interest, particularly in areas where advisers’ financial interests might impact impartial advice. Critical examination areas include:

• Fee arrangement transparency and disclosure
• Investment recommendation objectivity
• Best execution practices
• Private fund fee calculations and allocations
• Marketing practices compliance

Firms must demonstrate that their compliance policies effectively prevent placing their interests ahead of clients’ interests, especially during periods of market volatility.

AML and Financial Crime Prevention

Anti-money laundering programs remain a cornerstone of regulatory compliance. The Division will evaluate whether broker-dealers and registered investment companies maintain AML programs that are:

• Tailored to address specific risks associated with location and size
• Supported by independent testing mechanisms
• Enhanced with robust customer identification protocols
• Compliant with suspicious activity reporting obligations
• Aligned with Office of Foreign Assets Control sanctions

Examinations will focus particularly on firms’ ability to adapt their AML programs to address emerging risks, including those associated with digital assets and cross-border transactions. Special attention will be given to the adequacy of customer due diligence procedures and the effectiveness of transaction monitoring systems.

Implementing Best Practices for Exam Readiness

Successful SEC examination readiness requires a comprehensive approach that combines thorough preparation, technological integration, and organizational commitment. Many firms have found that implementing these best practices significantly improves their examination outcomes and overall compliance effectiveness.

Developing A Robust Mock Exam Process

A well-structured mock examination serves as the cornerstone of exam preparation. The process should mirror actual SEC examinations while providing opportunities for improvement and adjustment. Consider these essential components:

• Document Request Response:  Create centralized repository of required documents
• Staff Interviews:  Conduct practice sessions with key personnel
• Risk Assessment Review :  Evaluate current risk management frameworks
• Policy Implementation Check:  Verify adherence to written procedures
• Remediation Planning:  Develop action plans for identified gaps

Critical success factors include maintaining detailed documentation of findings and establishing clear timelines for addressing deficiencies. The mock exam should be conducted by independent third parties to ensure objectivity and identify blind spots in your compliance program.

Leveraging Technology for Compliance Monitoring

Modern compliance programs require sophisticated technological solutions to manage complex regulatory requirements. Essential features of effective compliance monitoring systems include:

• Real-time transaction surveillance capabilities
• Automated risk assessment tools
• Digital document management systems
• Integrated reporting frameworks
• Machine learning-enhanced anomaly detection

The implementation of these systems should align with your firm’s specific risk profile and operational needs. Technology integration must support rather than replace human oversight, particularly in areas requiring judgment and interpretation.

Establishing Clear Communication Protocols

Effective communication during SEC examinations requires structured protocols and well-defined roles. The Chief Compliance Officer should serve as the primary point of contact, coordinating all interactions with examiners. This centralized approach ensures consistency in responses and maintains proper documentation of all communications.

Communication preparation should include:

• Designation of backup points of contact
• Creation of standardized response templates
• Implementation of document request tracking systems
• Development of escalation procedures
• Regular staff training on communication protocols

Creating A Culture of Compliance

A strong culture of compliance starts with visible commitment from senior management and extends throughout the organization. Tone from the top remains the primary indicator of a healthy compliance culture, as recognized by SEC examination staff.

Successful implementation requires:

• Clear accountability at all organizational levels
• Regular compliance training and updates
• Integration of compliance considerations into business decisions
• Recognition and rewards for compliance excellence
• Consistent enforcement of policies across all staff levels

The effectiveness of your compliance culture should be regularly assessed through metrics such as policy adherence rates, training completion statistics, and incident reporting patterns. Management should demonstrate their commitment through active participation in compliance initiatives and allocation of adequate resources for compliance functions.

Firms should document their efforts to foster a compliance-focused environment, as this documentation serves as evidence during SEC examinations. Regular assessments of the compliance culture, including employee surveys and independent reviews, help identify areas requiring enhancement and demonstrate ongoing commitment to regulatory compliance.

Meet the SEC’s 2025 Examination Priorities with Confidence

Financial firms face complex challenges meeting SEC’s 2025 examination priorities, requiring a multi-faceted approach combining robust policies, advanced technology, and comprehensive staff training.  

Oyster’s experts have the CCO, FINRA, SEC and state regulatory experience to help solve complex regulatory challenges. Oyster Consulting provides compliance support to broker-dealers and investment advisors, including risk assessments, testing, remediation, outsourced compliance roles and automated compliance solutions.