At a glance
- The list includes private fund loans, stakes in private companies held through special purpose vehicles, and complex products such as ETFs built on less-liquid assets, inverse and single-stock ETFs, and option-based funds.
- For private fund advisors, examiners will assess risk disclosures and whether compliance policies address both fund- and investment-level risks.
- For an advisor whose clients hold private fund loans or SPV stakes, examiners will look at what the fund discloses about risk and how the recommendation matched the client's objectives.
SEC examiners will prioritize advisors who recommend illiquid products in 2027, according to the Division of Examinations' newly released exam priorities. The list includes private fund loans, stakes in private companies held through special purpose vehicles, and complex products such as ETFs built on less-liquid assets, inverse and single-stock ETFs, and option-based funds. Examiners will also probe how firms guard against AI-generated phishing and synthetic or deepfake voice and video used for social engineering.
For private fund advisors, examiners will assess risk disclosures and whether compliance policies address both fund- and investment-level risks. They will also review advisors' fiduciary obligations, including whether recommendations align with clients' objectives and risk tolerance. Advisors that have grown through M&A are again a priority.
For an advisor whose clients hold private fund loans or SPV stakes, examiners will look at what the fund discloses about risk and how the recommendation matched the client's objectives. An interval or tender-offer fund holding those assets would fall inside the categories the division lists, which suggests the sponsors and the advisors selling those funds face the same disclosure and policy questions.
Lori Weston, head of compliance at STP Investment Services, said AI is “continually embedded” in many third parties' software, so oversight has to reach beyond approved vendors. She said chief compliance officers should conduct ongoing reviews of third-party partners and of employees who use personal AI accounts for business, which she said raise recordkeeping and Regulation S-P concerns. Reg S-P readiness is itself on the 2027 list.
Reported by The Wrap desk from WealthManagement — Alts. Published . Corrections