U.S. securities regulator names crypto, ESG among 2022 exam priorities

FILE PHOTO: The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their  headquarters in Washington, D.C.
FILE PHOTO: The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. REUTERS/Andrew Kelly/File Photo

March 30, 2022

WASHINGTON (Reuters) -The U.S. Securities and Exchange Commission (SEC) on Wednesday flagged crypto-assets, information security, the private fund sector and environmental, social and governance issues among its examination priorities in 2022 for market participants such as broker-dealers and investment advisers.

The SEC’s examinations division, tasked with monitoring risks and ensuring investor protection, will also review whether funds’ proxy votes align with their ESG-related disclosures and mandates, and whether there are misrepresentations of ESG factors being considered, the agency said in a statement.

The agency’s exam outlook highlighted areas that have emerged as priorities for the top U.S. markets regulator since Democrats took the helm in 2021, from climate and crypto to broker-dealers’ procedures to handle phishing and other cyber attacks.

The SEC’s examiners will focus on custody arrangements for crypto assets and will assess any sales, recommendations, advice and trading of crypto, the SEC said.

The agency also targeted private funds in its outlook for 2022 exams, with plans to review investment advisers’ portfolio strategies, risk management, disclosures and conflicts of interest.

(Reporting by Chris PrenticeEditing by Chris Reese and Cynthia Osterman)