Complex product advice under scrutiny: SEC 2027 exams focus on conflicts of interest and supervision

One list, covering more than 34,000 registrants. On 23 October 2026 the U.S. Securities and Exchange Commission (SEC) issued press release 2026-109, in which its Division of Examinations announced the examination priorities for fiscal year 2027.

This is an annual report setting out the areas the Division considers to carry higher risk for investors or market integrity. The categories of registrant affected are broad: investment advisers, investment companies, broker-dealers, self-regulatory organisations, clearing agencies, municipal advisors, transfer agents, crowdfunding platforms and security-based swap entities.

SEC Chairman Paul S. Atkins described examinations as one of the most important tools for promoting compliance, while Division of Examinations Director Keith Cassidy said the markets the SEC oversees continue to evolve rapidly.

Investment advisers: conflicts of interest and complex products

The press release names four priorities for investment advisers: fiduciary obligations, conflicts of interest, investment recommendations and compliance programmes. In an analysis dated 29 October, the law firm Sidley Austin said economic conflicts of interest will be expressly covered, linked to a risk alert of 9 June 2026, with examples including fee rebates, the calculation of fees and expenses, cash management and consideration arrangements.

Sidley added that where an adviser recommends illiquid or complex products, examiners will look at whether the product suits the client, the valuation method, and whether liquidity and exit costs are assessed and disclosed. Advisers whose client accounts can be accessed by third parties, that rely on proxy advisory firms, that are newly registered or have never been examined, or that have dispersed branch offices are also on the list.

Broker-dealers: Regulation Best Interest, supervision and anti-money laundering

The press release lists the broker-dealer priorities as financial responsibility, trading practices, supervision and anti-money laundering compliance. According to the readings of two law firms, Sidley and WilmerHale, Regulation Best Interest (Reg BI) remains a focus. WilmerHale's article of 26 October lists products including variable annuities, registered index-linked annuities, low-priced securities, zero-day-to-expiration options, single-stock ETFs, private placements and structured products, and also covers account allocation by dually registered firms; Sidley specifically mentions recommendations to older or vulnerable investors.

Both firms say supervision has become a standalone examination item, covering supervisory systems, written procedures and internal controls, including the supervision of new products. WilmerHale adds that anti-money laundering now sits within the broker-dealer section, with the focus including customer due diligence, suspicious activity reporting, foreign omnibus and nested accounts, and pump-and-dump manipulation involving foreign companies.

Cross-cutting priorities: retail investors, cybersecurity and new technology

• Protecting retail investors, especially in products that are complex, high-risk and illiquid.
• Private funds and private credit.
• Operational resilience, cybersecurity and protection of client data; WilmerHale says fiscal 2027 is the first full examination cycle after the Regulation S-P amendments took effect, and examinations also cover Regulation S-ID.
• Emerging technology, for which the press release uses the term "super intelligence"; WilmerHale says firms using artificial intelligence tools in advice, portfolio management or compliance must show the tools fit within their existing fiduciary and supervisory frameworks.
• Market infrastructure risk, including US Treasury clearing reforms and tokenisation.

Some items are in, others out. Comparing with the previous year, Sidley notes that crypto assets are no longer a standalone priority while tokenisation is expressly mentioned; cash sweep programmes, Rule 605 disclosures and alternative trading systems are also no longer expressly listed, but remain subject to existing obligations. The SEC also stresses that the list is not exhaustive: examiners will review firms' overall activities and may adjust their focus in response to market events, investor concerns, new technology and new products.

Analysis: what it means for recruiting teams

For insurance agents who also hold securities licences, the point to note is that variable annuities and registered index-linked annuities appear in the Reg BI product list compiled by WilmerHale. This is a law firm's reading of the examination priorities, not wording from the SEC press release, which does not mention insurance agents; teams should treat it as a reference rather than a conclusion.

The law firms say supervision has become a standalone item, covering supervisory systems, written procedures and the supervision of new products. Recommendations to older or vulnerable investors (Sidley), advisers with dispersed branch offices (Sidley) and the use of artificial intelligence tools to assist with advice (WilmerHale) also fall within the areas the law firms highlight.

Before asking recruits how much they can sell, first check that the team's supervision arrangements and written procedures are in place.

Compiled by the F50 Editorial Team from public sources, for general reference only and not professional advice. Details are correct as of the publication date and may change.