SEC risk alert highlights areas of continuing deficiencies and future focus of examinations
On August 22, 2022, the Division of Examinations (the “Division”) of the US Securities and Exchange Commission (“SEC”) published a risk alert (the “2022 Risk Alert”) highlighting the most frequently cited deficiencies and weaknesses observed in recent municipal advisor examinations. Topics include municipal advisor registration and filings, recordkeeping, supervision and disclosure of conflicts of interest. Notably, the Division previously identified many of the same topics in a 2017 risk alert with respect to newly registered municipal advisors.
The 2022 Risk Alert, together with two recent enforcement actions against municipal advisors, may signal an increase in scrutiny from SEC examination and enforcement staff regarding municipal advisor practices. As such, firms should consider reviewing and assessing their compliance with each of the topics highlighted in the alert. In this regard, we note that the Division indicated that it intends for future examinations “to include a more prominent focus on the core standards of conduct and duties applicable to municipal advisors.”
This Legal Update is a brief summary of the Division's key observations from the 2022 Risk Alert.