As the SEC 2026 fiscal year draws to a close, we’ve seen a variety of changes to the SEC’s priorities and approaches to examinations. At the start of the year, Chairman Atkins spoke of getting back to basics and refocusing on harm to investors and the integrity of markets. The Division of Examinations reflected this focus in its 2026 Examination Priorities, and over the summer, many investment advisers experienced these changes in new SEC examinations.
Below are 5 key takeaways we’ve seen from a busy summer of SEC Exams. These takeaways can offer some practical guidance for advisers who want to ensure their compliance programs are SEC-exam ready as we head into busy fall, as we expect these focus areas to continue through the fall.
1. Quantifiable Harm Focuses on Fees and Expenses
Accurate fee disclosure, calculation, and billing remain a key focus area in examinations. This year, the SEC created a new Accounting Fraud Unit and a Retail Fraud Working Group within the Division of Enforcement, which means examiners will be quick to refer any suspicious billing practices to these specialized groups within the Division of Enforcement. Expect questions on the following:
- Consistency of fee calculations to advisory agreements and limited partner agreements for private funds
- Testing for accuracy of all types of fees, including adjustments for the June 29, 2026, changes to the qualified client thresholds for performance-based fees under Rule 205-3.
- Timely reimbursement of any unearned fees and/or calculation errors.
- Proof of proration of fees for terminated accounts.
- Review of proper application of management fee offsets
- Maintain consistency to fund disclosures and agreements with portfolio companies.
- Include any interest collected on deferred fees in offsets credited to the fund.
- Allocation of expenses according to policies and procedures
- No blurring of firm expenses with fund expenses.
- Keep allocation consistent between different funds and be ready to produce documentation.
2. Investor Protection Highlights Conflicts of Interest
Economic conflicts of interest were the topic of the first SEC Risk Alert of 2026. Examiners observed conflicts of interest from compensation and other revenue sources that were undisclosed or under-disclosed due to misleading statements or incomplete details. Expect your sources of income to draw attention:
- Cash Management Recommendations as a source of conflict
- Recommending interest bearing accounts at affiliated entities
- Cash sweep vehicles and revenue sharing on cash balances resulting in higher compensation for the firm.
- Failing to disclose other forms of revenue
- Any instance of 12b-1 fees for mutual fund recommendations.
- Benefits to the adviser from recommendations regarding custodial credits, margin loans, and transaction markup fees.
- Individual adviser representatives that are also registered representatives, have an interest in service providers, or have any other arrangements that benefit them personally for client recommendations.
- Ineffective policies and disclosures for known conflicts of interest
- Failing to cover all types of billing arrangements or services.
- ADV 2A Item 10 and Item 12 disclosures that fail to disclose affiliate relationships and revenue sharing arrangements or make use of the word “may” when active arrangements exist.
3. Reg S-P and Emerging Technology Pressure Cyber Policies
As the major rulemaking this year, Amended Regulation S-P (“Reg S-P”) was sure to impact examinations. The SEC hosted multiple webinars with members of the Technology Control Program that included what to expect in initial document requests for examinations focused on Reg S-P, such as written policies and procedures, the incident response plan, documentation of monitoring of systems and activity for incidents, and information on any incidents that occurred during the review period. In practice, general requests have turned to more specific inquiries regarding cybersecurity:
- Producing policies and procedures, testing, and monitoring
- All policies need to be adopted and in producible form, especially written incident response and vendor management policies and procedures.
- Requests ask for specific technology or cybersecurity risk assessments, alerts, testing, monitoring, and third-party reviews and/or mock exams.
- Documentation of responding to compliance findings
- A record of all incidents or breaches and the firm’s response under its incident response plan is the most common Reg S-P focused request.
- Any non-compliance discovered during a live incident, testing, assessment, annual review, or third-party review needs to have matching documentation of the actions taken to correct the non-compliance and improve the compliance program.
- Tailoring compliance policies and procedures to new tools such as artificial intelligence and emerging technologies
- Any of these new technologies in use will be examined against current policies and procedures, which may not be adequate or effective.
- Document evaluation of these tools for new risks to your compliance program and tailor your policies and procedures where necessary.
4. Business Changes Draw New Exam Questions
The SEC’s 2026 Examination Priorities pointed to firm changes that were likely to impact compliance programs. Changes on your ADV filings, such as additions of new business lines, new affiliates, changes in ownership, and compliance officers, do get noticed. The focus on firm changes appears in requests regarding the following:
- New products and services trigger needed compliance changes
- Compliance for newly launched private funds and firms that are managing private funds for the first time.
- Expansion into new categories of clients, asset types, or services will be asked about changes to the compliance program for these expansions.
- Expect questions around valuation and liquidity when recommending alternative investments and complex products.
- Growth through mergers and acquisitions impacts compliance programs
- Newly acquired businesses will be scrutinized for implementation of the acquiring firm’s policies and procedures.
- The acquiring firm’s compliance program will be scrutinized for adequacy and effectiveness for any new risks the acquired businesses bring into the relationship.
5. The Basics Still Matter
Examinations still review the pillars of a compliance program and routinely dig into common issues, including:
- Accurate regulatory assets under management calculation and supporting data.
- Signed advisory contract on file for all clients on the client list.
- Disclosure of the use of soft dollars within the Rule 28(e) safe harbor.
- Custody disclosures and corresponding procedures for standing letters of authorization, surprise examination, or audited financial statements depending on firm custody needs.
Be Prepared
After the government shutdown to start the fiscal year, the Division of Examinations has been making up for lost time. Over the summer, we saw a spike in examinations and initial request lists asking for production within one week. Firms that wait until an exam letter arrives to pull together documentation may find themselves behind. Now is the time to review fee billing practices, conflicts of interest, Reg S-P and cybersecurity controls, and the other areas outlined above, before fall exam activity picks up further.
Fairview’s full-service compliance support goes beyond the examination itself. Throughout the year, we work with clients on testing and documentation designed to help ensure they’re prepared well before an exam letter arrives. When an examination does happen, that support extends to onsite assistance for our clients’ SEC examinations at no additional cost—this is part of our standard support, not an add-on. During an examination, we work with investment advisers to track SEC requests and responses, prepare supporting documentation, prepare staff for calls and interviews with the SEC, travel onsite to assist, and help adjust the compliance program and policies and procedures to address any findings.
If you have questions about exam readiness or would like to discuss your compliance program, contact us. Our team is here to help.
