Regulatory Updates

On November 17, 2025, the Division of Examinations (EXAMS) of the U.S. Securities and Exchange Commission (SEC) announced its 2026 examination priorities for SEC registrants including registered investment advisers (RIAs)¹. Under the leadership of Chair Paul Atkins, EXAMS continues to prioritize the SEC’s focus on retail investors, RIAs’ fiduciary obligations to their clients and the effectiveness of RIAs’ compliance programs. As under past administrations, EXAMS affirmed its continued focus on “never before examined” and “recently registered” RIAs as well as firms expanding business or offering complex products or investment strategies. EXAMS also placed more emphasis on other areas, such as compliance with Regulation S-P and compliance program controls concerning information security.

 

Fiduciary Obligations

EXAMS will closely scrutinize RIAs’ investment advice and related disclosures in 2026 with a focus on the suitability of recommendations, best execution and management of conflicts of interest, including:

• The impact of any financial conflicts of interest on providing impartial advice
• Consideration given by RIAs to the factors surrounding investment recommendations, including:
  • The costs of the investment, e.g. sales fees or deal commissions
  • The investment product’s or strategy’s investment objectives
  • The characteristics of the investment
  • The investment’s liquidity
  • The risks versus the potential benefits
  • Market volatility
  • The likely performance of the investment in a variety of market and economic conditions
  • The time horizon
  • Any costs associated with exiting the investment
• RIAs’ evaluation of best execution in transacting on behalf of clients and compliance with their fiduciary obligation to maximize value for their clients in any transactions.
• RIAs’ recommendations of investments with higher risk factors including:
  • Alternative investments (e.g., private credit and private funds with investment lock-up for extended periods)
  • Complex investments (e.g., exchange traded funds (ETF) wrappers on less liquid underlying strategies, option-based ETFs and leveraged and/or inverse ETFs)
  • Products that have higher costs associated with investing (e.g., high commissions and higher investment expenses than similar products/investments)
• The alignment of RIAs’ investment recommendations with clients’ investment objectives, risk tolerance and financial/personal backgrounds. EXAMS intends to focus on: 
  • Recommendations to older investors and those savings for retirement
  • Side-by-side management of private funds and separately managed accounts specifically focusing on newly registered funds (e.g., reviewing for favoritism in investment allocations and interfund transfers)
  • Newly launched private funds and RIAs who have not previously managed private funds (e.g., reviewing for regulatory awareness, liquidity, valuation, fees, disclosures and differential treatment of investors, including use of side letters)
  • RIAs recommending products that may be particularly sensitive to market volatility

 

Higher-Risk Advisory Activities

EXAMs also announced heightened scrutiny for RIAs with structures, investment advice or products that pose increased risks, including:

• RIAs that are dually registered as broker-dealers, particularly where such RIAs have advisory representatives who are also dually licensed as registered representatives and receive compensation or other financial incentives that may create conflicts of interest that must be addressed (e.g., account recommendations and allocations)
• RIAs utilizing third parties to access clients’ accounts, where controls may be insufficient to protect client assets and data 
• RIAs that have merged or consolidated with or been acquired by, other investment advisers, which may result in accompanying operational and/or compliance complexities or new conflicts of interest
• RIAs with activist engagement practices (e.g., whether they are making late or inaccurate filings on Schedules 13D and 13G; and Form 13F; Forms 3, 4 and 5; and Form N-PX)

 

Compliance Program Management

EXAMS also confirmed it will continue to examine the core areas of RIAs’ compliance programs, namely:

• Marketing 
• Valuation 
• Trading
• Portfolio Management 
• Disclosure and Filings 
• Custody

In examination of these core areas, the EXAMS will analyze RIAs’ annual reviews, compliance testing, the effectiveness of the controls adopted by RIAs and whether the policies and procedures are implemented and enforced.

 

Investment Companies

The SEC will continue prioritizing examinations of registered investment companies (RICs), including mutual funds and ETFs, given their importance to retail investors, especially those saving for retirement. Reviews will focus on compliance programs, disclosures, filings (e.g., summary prospectus) and governance practices. Key areas include:

• Fees and Expenses: Accuracy of fund fees, waivers and reimbursements
• Portfolio Management and Disclosures: Consistency with stated strategies, fund filings, marketing materials and compliance with the amended Names Rule (requiring funds to invest at least 80% of assets in line with their name)
• Developing Areas of Interest:
  • RICs involved in mergers or similar transactions
  • Funds using complex strategies or holding illiquid investments (e.g., closed-end funds), including valuation and conflict issues
  • Funds with novel strategies or leverage vulnerabilities

The SEC will also prioritize never-before-examined and recently registered RICs to encourage robust compliance programs.

 

Information Security and Operational Resiliency

A perennial favorite, EXAMS confirmed that it will continue to review RIAs’ procedures and practices to assess whether RIAs are reasonably managing cybersecurity and operational risks. EXAMS will place heightened focus on how RIAs protect sensitive information, prevent data loss, manage data access and respond effectively to incidents, among other areas, including how RIAs have developed, implemented and maintained policies and procedures in accordance with Regulation S-P’s new provisions.

Further, EXAMS will also review how RIAs train employees and implement security measures to address new risks, such as those linked to artificial intelligence (AI).

 

Disclosures

EXAMS will also continue to evaluate the adequacy and completeness of RIAs’ disclosures, with an emphasis on fees and conflicts concerning compensation structures related to accounts and products.

 

Advisers Subject to Examination

In addition to new SEC registrants or never-before-examined registrants, EXAMS announced that it will seek to examine RIAs which report changes or expansion of the RIA’s business, investment products, investment strategies and/or other new material changes.

 

What Advisers Should Be Doing Next

RIAs should bear in mind EXAMS retains the authority to examine any area within its jurisdiction, even if not highlighted as a 2026 examination priority. Thus, RIAs should continue to maintain compliance programs reasonably designed and tailored to its business.

The 2026 examination priorities reflect both continuity and evolution in regulatory focus and underscore the importance of proactive compliance. To that end, Kroll recommends RIAs:

• Ensure that all clients and public facing documentation such as Form ADV (particularly Part 2A), websites, social media, marketing materials, due diligence questionnaires, fund offering documents and regulatory filings are consistent and adequately disclose the RIA’s conflicts of interest, particularly those with financial implications.
• Reevaluate the RIA’s compliance program with the goal of ensuring that it is current, effectively governs the RIA’s business activities, accurately reflects the RIA’s practices and is “reasonably designed to prevent violation of the Advisers Act by the adviser or any of its supervised persons.”²
• RIAs that have engaged in new advisory businesses, launched new funds, promoted new investment strategies or asset classes, should ensure that they have updated the relevant policies and procedures concerning the marketing and disclosure of those new business initiatives as well as any respective changes to valuation, custody, investment advisory and other policies and procedures. 
• RIAs that fall within the groups EXAMS announced it would target for examinations, should consider engaging a third party to conduct a mock SEC examination to improve exam preparedness.
• Conduct a compliance gap assessment concerning readiness for or changes implemented because of Regulation S-P amendments. 
• Ensure that the RIA is timely with its annual compliance reviews and design such reviews to “prevent violations from occurring, detect violations that have occurred, and correct promptly any violations that have occurred.”³

 

How Can Kroll Help

Advisers needing assistance in “catching up” on annual reviews, evaluating their new business activities, conflicts of interests or general compliance concerns should be assured that Kroll’s staff of regulatory experts can support you in that undertaking. Kroll has experts to assist with conducting targeted compliance gap assessments and/or mock examinations, including those concerning Regulation S-P amendments and/or RIAs who have undergone material business changes or expansions.

Kroll’s Financial Services Compliance and Regulation (FSCR) practice is uniquely positioned to help RIAs navigate the SEC’s 2026 examination priorities with confidence. Our team combines deep regulatory expertise with practical industry experience to deliver tailored solutions that strengthen compliance programs and enhance exam readiness. Specifically, Kroll can support advisers by:

• Mock SEC Examinations: Simulating the SEC’s examination process to identify vulnerabilities, test controls and prepare staff for regulatory engagement
• Compliance Gap Assessments: Reviewing existing policies, procedures and practices against the SEC’s latest priorities, including Regulation S-P amendments, to highlight areas requiring remediation
• Annual Review Support: Assisting firms in catching up on overdue reviews or enhancing the scope and rigor of annual compliance testing
• Cybersecurity and Information Security Readiness: Advising on policies, procedures and training programs to meet heightened SEC scrutiny of data protection and operational resiliency
• Regulatory Filings and Disclosure Reviews: Ensuring Form ADV, fund offering documents and marketing materials are consistent, accurate and aligned with fiduciary obligations

By partnering with Kroll, RIAs gain access to a team of former regulators, compliance officers and industry practitioners who understand both the letter of the law and the practical realities of running an advisory business. Whether you are a newly registered adviser, expanding into complex products or simply seeking to strengthen your compliance framework, Kroll’s FSCR services provide the expertise and assurance needed to stay ahead of regulatory expectations.

 

Sources:
 ¹ https://www.sec.gov/files/2026-exam-priorities.pdf
 ² https://www.sec.gov/rules-regulations/2003/12/compliance-programs-investment-companies-investment-advisers#P66_13177
 ³ Id.