The SEC's FY 2027 Exam Priorities: 6 Areas Every RIA CCO Should Review

The SEC has released its FY 2027 Examination Priorities. For RIAs, several areas deserve a closer look: economic conflicts, proxy voting, emerging technology, Regulation S-P, valuation, and private fund operations.

None of these areas should be a surprise to an experienced CCO. What matters is whether the firm has addressed the risks in practice, not simply whether the policies exist. When examiners look at these areas, firms need to be able to explain their processes, produce supporting records, and demonstrate that identified issues are being addressed.

What the SEC Is Prioritizing in FY 2027

The SEC’s FY 2027 examination priorities extend beyond any single compliance issue. The Division of Examinations has identified several areas of heightened attention across investment advisers, broker-dealers, and other market participants:

• Investment adviser obligations: Fiduciary duty, conflicts of interest, investment recommendations, and compliance program effectiveness.
• Retail investor protection: Complex, higher-risk, and illiquid investment products.
• Private markets: Private funds, private credit, and other complex investment strategies.
• Broker-dealer oversight: Financial responsibility, trading practices, supervision, and anti-money laundering compliance.
• Cybersecurity and resiliency: Protection of customer information, incident response, and operational resilience.
• Emerging technology: Super intelligence and other advanced technologies affecting market operations, compliance, fraud prevention, and investor protection.
• Market infrastructure: Treasury clearing reforms, tokenization, and related market developments.
• Regulatory oversight: Self-regulatory organizations and other critical market participants.

For RIAs, several of these priorities deserve particular attention. The following six areas highlight what firms should review within their own compliance programs and where gaps may warrant action.

1. Economic Conflicts: Do Your Disclosures Match Your Actual Practices?

The SEC continues to focus on economic conflicts involving fee rebates, fee and expense calculations, cash management, deposits, withdrawals, and other financial arrangements that could affect an adviser's recommendations. The Division's June 2026 Risk Alert on economic conflicts of interest provides additional context on the types of deficiencies examiners have observed.

The issue for CCOs is straightforward: disclosures need to reflect how the business actually operates. Review advisory agreements, Form ADV, billing calculations, cash management arrangements, and compensation tied to products or service providers. If the firm's practices have changed, determine whether the disclosures and controls have kept up. A conflict that is disclosed inaccurately or managed inconsistently can still create problems.

2. Proxy Advisers: Are You Exercising Appropriate Oversight?

The SEC has placed renewed emphasis on advisers that rely on proxy advisory firms. Examiners may assess how advisers evaluate voting recommendations, consider potential conflicts, and determine whether their reliance on these providers is consistent with their obligations. The topic also follows increased regulatory scrutiny of proxy advisory services, including the SEC's subpoena enforcement action involving Institutional Shareholder Services.

Using an outside provider does not eliminate the adviser's responsibility to maintain appropriate oversight. Review your proxy voting policies, provider due diligence, conflict assessments, and documentation of voting decisions. If the firm routinely accepts recommendations without a clear process for evaluating them, determine whether that practice is consistent with its stated policies and fiduciary obligations.

3. Super Intelligence: Do Your Technology Controls Reflect How the Firm Operates?

The FY 2027 priorities highlight risks associated with super intelligence and other emerging technologies, including AI-enabled cyberattacks, deepfakes, and the use of advanced tools in investment analysis, fraud detection, and compliance monitoring. These risks are relevant even to firms that are not offering AI-driven investment advice.

Start by identifying where employees use AI and other automated tools, including applications adopted outside formal technology projects. Assess what information those tools can access, how their outputs are reviewed, and whether existing cybersecurity and data protection controls address their use. The goal is not simply to establish an AI policy. It is to make sure the firm's controls reflect the technology it actually uses and the risks that technology introduces.

4. Regulation S-P: Can You Execute Your Incident Response Plan?

With the amended Regulation S-P requirements effective according to the applicable compliance dates, examiners are looking at implementation rather than readiness alone. Relevant areas include incident response, customer notification, safeguards for customer information, and oversight of service providers.

Review the firm's incident response plan and test whether the process works beyond the written procedure. If a vendor reports unauthorized access to customer information, can the firm identify the right contacts, assess the incident, determine applicable notification obligations, and document its response? Review vendor agreements, escalation procedures, and evidence of testing. A policy that has never been tested may not be enough when the firm has to respond under pressure.

For the regulatory background, see the SEC's Regulation S-P amendments.

5. Valuation: Can You Support the Values You Report?

The SEC continues to emphasize valuation processes and methodologies, particularly for complex and illiquid investments. The FY 2027 priorities specifically identify loans provided by private funds or business development companies (BDCs), where the assumptions and methods used to determine value may require closer scrutiny.

CCOs should understand who determines valuations, what information supports them, how assumptions are reviewed, and how exceptions are handled. Do not assume that an external administrator or valuation provider removes the need for appropriate oversight. Sample relevant holdings and confirm that the firm's methodology is reasonable, the supporting evidence is retained, and material changes or disagreements are documented and escalated.

6. Private Funds: Are Fees, Expenses, and Allocations Consistent With Your Documents?

For private fund advisers, the SEC is highlighting fund-level borrowing, affiliated service providers, investment allocations, and fee and expense calculations at both the fund and investment levels. These areas can create conflicts and investor concerns when practices are inconsistent with governing documents or disclosures.

Review how expenses are allocated, how affiliated providers are compensated, how borrowing arrangements affect the fund, and whether fee calculations follow the relevant agreements. Firms that have already undergone a private fund examination should not assume these issues are behind them. Changes to fund structures, investment strategies, or service providers can introduce new risks that require updated controls and disclosures.

What CCOs Should Do Before Their Next Examination

The SEC's examination priorities are not an exhaustive list of what examiners may review, and the announcement does not itself create new legal obligations. It does, however, provide a useful basis for evaluating where your firm's risks and controls deserve closer attention. Read the full FY 2027 Examination Priorities and assess which areas are most relevant to your business.

I would start by selecting the applicable areas, testing the controls currently in place, and documenting any gaps. Assign an owner to each finding, establish a reasonable remediation timeline, and retain evidence of the corrective action. Do not wait for an examination request to discover that a control exists on paper but is not being followed.

NextReg works with RIAs to evaluate compliance programs, identify control weaknesses, and turn findings into practical corrective actions. If your firm needs support preparing for the year ahead, schedule a consultation with our team. We can help you determine where your program needs attention and develop a clear plan to address the gaps.