Skip to Main Content

SEC 2021 Exam Priorities

United Atlantic Legal Services would like to share FinProLaw’s most recent breakdown of the SEC’s 2021 Examination Priorities.

In March of 2021 the SEC’s Division of Examinations announced its 2021 Examination Priorities (the “Report”), which includes a greater focus on climate-related risks. “The SEC publishes its examination priorities annually to provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of the U.S. capital markets.” The Report covers a number of topics, most of them rather predictable, and a link to the entire Report is at the bottom of this post.  

Chief Compliance Officers (“CCOs”) should read the entire Report but we wanted to focus on a couple topics that are covered in more detail in our New Chief Compliance Officer Bootcamp course (which is FREE, link below).   

We begin by quoting the Report:

We continue to believe it is important to emphasize that compliance programs, CCOs and other compliance staff play critically important roles at firms. Indeed, culture and tone from the top are key. In the course of conducting thousands of examinations of many different types of firms, the hallmarks of effective compliance become apparent. One such hallmark includes compliance’s active engagement in most facets of firm operations and early involvement in important business developments, such as product innovation and new services. Another is a knowledgeable and empowered CCOs with full responsibility, authority, and resources to develop and enforce policies and procedures of the firm. In a November speech, Director Driscoll highlighted his views on what it means to have an empowered CCO in a position of sufficient seniority and with the necessary authority. The speech also addressed firms’ continued need to address compliance, such that it has adequate resources commensurate with the role. And importantly, a commitment to compliance from C-level and similar executives to set a tone from the top that compliance is integral to the organization’s success and that there is tangible support for compliance at all levels of an organization.

Active Engagement

The Report notes that effective compliance “includes compliance’s active engagement in most facets of firm operations and early involvement in important business developments, such as product innovation and new services.” Chief Compliance Officers shouldn’t have to insist on being brought into business development, and well-run firms should actively involve compliance at very early stages. In many cases, however, it helps to have a Chief Compliance Officer who is tactfully, but frequently, reminding everyone to bring the compliance department in early.

Chief Compliance Officers should be involved in leadership and board of directors meetings which provide for an ongoing flow of vital information. Rarely is a firm able to effectively initiate a new business line without the active involvement of the Chief Operations Officer, therefore, it makes sense to have frequent communication with the operations team to ensure that the compliance department is seeing what they are seeing. 

Knowledgeable and Empowered

The Report begs the question: What is a knowledgeable and empowered Chief Compliance Officer?

Knowledgeable. In our New Chief Compliance Officer Bootcamp course (offered free via the link below) we spend time discussing how a Chief Compliance Officer can become more knowledgeable about the industry and their role in it. It is important to note that there is no single approach to becoming knowledgeable, but rather one can become knowledgeable through a number of different paths: degrees, certifications, work experience, etc. 

However, Chief Compliance Officer’s should note that they are not legal and regulatory encyclopedias and should not be expected to recite statutes from memory. Instead, nonweldable includes knowing what you don’t know – and seeking help where they don’t know.  

Empowered. Importantly, it is not enough to be able to say one is empowered. Regulators will look for evidence that a Chief Compliance Officer is actually empowered. Regulators will look at recommendations made by the Chief Compliance Officer to firm leadership and how often such recommendations are implemented (or considered at all). Further, regulators will take a serious look at legal or regulatory issues identified by the Chief Compliance Officer, escalated to firm leadership, but not acted upon. For example, regulators would be concerned where there was violation of firm policies or procedures, and where the Chief Compliance Officer (or his or her team) identified the violation and made a recommendation for action, but where no such action was taken.

Tone From the Top

What is not a good look for a compliance program? Where firm leadership does not participate in or are completely absent from trainings or other compliance initiatives. What is a good look for a compliance program? Where firm leadership supports (visibly) the efforts of the compliance department. This should be done in a tactful manner. Firm leadership asking tough (but intelligent) questions during trainings, for example, is a great way to show that the firm’s leadership is engaged in these matters. It doesn’t hurt to give firm leadership a rough outline of what will be discussed during compliance trainings and suggesting areas where leadership’s comment/question wouldn’t be objected to. Another example that shows tone from the top is where the firm’s leadership expresses interest in compliance department initiatives – say during a company-wide meeting. Many Chief Executive Officers are focused on growing the business (rightfully so) and it does not hurt for them to take a moment and acknowledge the efforts of the compliance department and major initiatives happening therein. 

A final comment on this, is that it is important to, again tactfully, demonstrate firm leadership’s “tone from the top.” The initial meeting with regulators during a routine examination should be led by the Chief Compliance Officer, however, it does not hurt to have the Chief Executive Officer or Chief Operations Officer discuss how other departments are actively supporting compliance initiatives.  


Chief Compliance Officers should take information provided by regulators, like the Report discussed here, to heart and should work hard to ensure that any guidance provided is being followed. Such information can, however, be used by a Chief Compliance Officer to help push and reinforce compliance initiatives within a firm. 

Link to 2021 Examination Priorities Report: 

About the Author

Michael Rasmussen is the founder of United Atlantic Legal Services. He is a licensed attorney in Florida and registered solicitor in the United Kingdom. Michael has acted as General Counsel and Chief Compliance Officer to several investment advisers, including private fund managers, responsible for the management of billions of dollars in client assets.  

Michael is also the founder of FinProLaw, an online learning platform where Michael has created courses designed for investment adviser compliance professionals. These courses include: 

  • Investment Adviser Compliance Essential for Chief Compliance Officers 
  • Foundations of Investment Adviser Compliance 
  • What is a “Security”? 
  • Investment Adviser Marketing Rule 
  • Regulation A – Exemption from Registration 
  • Regulation Crowdfunding – Exemption from Registration 
  • Regulation D – Exemption from Registration 

Michael can also be found on LinkedIn.

Investment adviser firms who are also clients of United Atlantic Legal Services can receive many of these courses at a significantly reduced fee or, in some cases, at no expense. Contact us today or visit the FinProLaw to learn more.