On October 23, the Securities and Exchange Commission (SEC) Division of Examinations (the Division) released its fiscal year 2027 Examination Priorities, with significant attention to emerging technology, cybersecurity, retail investor protection, and anti-money laundering (AML) compliance. The priorities were developed in coordination with divisions and offices across the SEC and reflect examination observations, market developments, investor concerns, industry engagement, and emerging trends. They identify areas the Division believes currently present heightened risks to investors or market integrity and will help guide its risk-based examination program. Importantly, the Division makes clear that the priorities are not exhaustive, and the Division may adjust its focus throughout the year in response to emerging risks, products and services, market events, and investor concerns. Nevertheless, the priorities provide important guidance for financial services firms as they assess their compliance and risk-management programs for the year ahead.

Emerging technology is a significant area of focus. The SEC notes that registrants increasingly are using “super intelligence” (SI) in areas including investment analysis, customer management, code development, fraud prevention and detection, back-office operations, AML and Regulation Best Interest (Reg BI) compliance, and trading. Examiners will focus on policies and procedures for monitoring this technology and will continue to scrutinize automated investment tools, trading algorithms and platforms. Reviews will consider whether firms’ representations are accurate, operations and controls are consistent with investor disclosures, and algorithms produce advice or recommendations consistent with investors’ profiles or stated strategies.

Cybersecurity and protection of customer information also remain priorities. Examinations will assess governance, data loss prevention, access controls, account management, and incident response and recovery, including firms’ exposure to third-party service providers and shared technologies. The SEC specifically identifies SI-generated phishing and synthetic or deepfake voice and video as emerging cyber threats. Examiners also will assess compliance with Regulation S-P’s safeguards and incident-response requirements and Regulation S-ID, with particular attention to account takeovers, fraudulent transfers, stolen credentials, and emerging SI-related identity-theft risks.

Retail sales practices remain another key area. Broker-dealer examinations will continue to assess Reg BI compliance, including recommendations, conflicts of interest, reasonably available alternatives, disclosures, and satisfaction of the Care Obligation. The Division will pay particular attention to complex and higher-risk products and recommendations involving older and vulnerable investors and those saving for retirement or college.

AML compliance also remains firmly on the examination agenda. The SEC will examine whether broker-dealers appropriately tailor and update AML programs to their business models and risks, conduct independent testing and ongoing customer due diligence, and satisfy Suspicious Activity Report obligations. The Division specifically calls out risks involving foreign omnibus accounts and will also review firms’ monitoring of and compliance with Office of Foreign Assets Control sanctions.

The 2027 priorities underscore the SEC’s continued focus on core investor-protection and financial-crime obligations while expanding examination attention to the ways emerging technologies affect those obligations. Financial services firms should consider whether their compliance, cybersecurity, identity-theft, AML, and supervisory controls have kept pace with their adoption of new technologies and evolving risks. Because the announced priorities are not an exhaustive list of what examiners may review, firms should continue to maintain risk-based compliance programs that address the full range of their activities rather than treating the priorities as an examination checklist.

For questions about the Division’s fiscal year 2027 priorities, contact Jay A. Dubow, Ghillaine A. Reid, or any member of Troutman Pepper Locke’s Securities Investigations + Enforcement Practice Group.