SEC’s Fund Manager Priorities in 2025
For 2025, the Securities and Exchange Commission’s Division of Examinations announced its 2025 exam priorities for "registered" investment advisers. Next year’s examinations will prioritize areas such as fiduciary duties and standards of conduct for investment advisers, and cybersecurity, artificial intelligence (AI), and anti-money laundering (AML) for various market participants. In addition to conducting examinations in core areas such as disclosures and governance practices, the Division will also examine compliance with new rules. The number of SEC investment adviser exams conducted each year has been steadily on the rise as the number of registrants has also increased. A brief summary of increased priorities for investment advisers below:
SEC’s Fund Manager Priorities in 2025
SEC’s Fund Manager Priorities in 2025
Investment Adviser Fiduciary Obligations and Conflicts of Interest: With respect to investment advice provided to advisers’ clients regarding certain products, investment strategies, and account types, the Division will focus on recommendations related to: (i) high-cost products; (2) unconventional instruments; (3) illiquid and difficult-to-value assets; and (4) assets sensitive to higher interest rates or changing market conditions, including commercial real estate. The Division will also closely examine the impact of advisers’ financial conflicts on providing impartial advice and best execution, with consideration given for nonstandard fee arrangements.
Effectiveness of Investment Adviser Compliance Programs: The Division’s review may include: (1) fiduciary obligations of advisers that outsource investment selection and management. Private Fund Managers: Focus on advisers to private funds, for example: (1) whether disclosures are consistent with actual practice and if an adviser met its fiduciary obligations in times of market volatility and whether a private fund is exposed to interest rate fluctuations, such as commercial real estate, illiquid assets, or private credit fund; (2) the accuracy of calculations and allocations of private fund fees and expenses (both fund-level and investment-level), including valuation of illiquid assets, calculation of post-commitment period management fees, offsetting of such fees and expenses, and the adequacy of disclosures; and (3) disclosure of conflicts of interests and risks, and adequacy of policies and procedures, including use of debt, fund-level lines of credit, investment allocations, adviser-led secondary transactions, transactions between fund(s) and/ or others; investments held by multiple funds; and use of affiliated service providers. Recently Adopted SEC Rules: The Division plans to closely monitor private fund advisers’ compliance with recent SEC rules, including the Marketing Rule and whether advisers have adopted and actually follow policies and procedures to ensure compliance with these rules.
