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Report

Current Developments in SEC and FINRA Examinations & Enforcement 2022–2023

March 2023

Registered entities continued to be a significant focus of the US Securities and Exchange Commission’s (SEC’s) enforcement and rulemaking programs in 2022, and we expect similar attention this year. The SEC’s Division of Examinations recently issued its 2023 Examination Priorities Report, highlighting a number of areas that will draw increased scrutiny from the Examinations staff and are likely precursors to future enforcement sweeps and referrals. Similarly, the Financial Industry Regulatory Authority’s (FINRA’s) 2023 Report on Examination and Risk Monitoring Program identified many areas of focus for broker-dealers that will garner continued attention, including Regulation Best Interest, Consolidated Audit Trail, mobile apps, and cybersecurity.  

Morgan Lewis annually publishes a summary and analysis of the practices, developments, considerations, and enforcement actions of the SEC and FINRA. The following special reports by our securities enforcement and investment management teams highlight expected SEC and FINRA priorities in 2023 while reviewing significant enforcement matters of the last year.

View past reports >>

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A Special Report for Investment Advisers and Broker-Dealers
2022 will be remembered for aggressive rulemaking and enforcement, with the SEC securing record-breaking penalties. FINRA’s new Sanction Guidelines, which in part eliminated upper limit fine ranges for mid-size/large firms and catalogued several additional nonmonetary sanctions, suggest that FINRA too will be escalating sanctions. Ambitious regulatory agendas combined with an already heavy enforcement and examination focus on investment advisers and broker-dealers means that this year is likely to see registered entities continue to attract a disproportionate amount of regulators’ attention.
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A Special Report for Private Funds
Private funds were a major focus of the SEC’s enforcement and rulemaking programs in 2022, and we expect 2023 to be even more active. One legacy of 2022 will be the market turbulence that affected both traditional and new investment products, which can be expected to heighten the SEC’s resolve to regulate private funds more heavily in 2023. When this ambitious regulatory agenda is combined with an already heavy enforcement and examination focus on private funds, 2023 is likely to see private fund managers continue to attract a disproportionate amount of the SEC’s attention.
Public Companies
Current Developments in SEC Enforcement for Public Companies
The US Securities and Exchange Commission (SEC) continued its significant focus on public companies in 2022 with its enforcement and rulemaking programs. This heightened level of attention will likely continue as the SEC approaches the end of its fiscal year on September 30, 2023, and into fiscal year 2024. Recent enforcement activity points to several areas of interest for the SEC—and provides a valuable window for public companies into the SEC’s priorities.