The SEC Just Set Its 2024 Compliance Priorities for Advisors. ESG Didn't Make the Cut.
- Media Manager
- Oct 18, 2023
- 1 min read
Microsoft Start - Barron's
Written By: Kenneth Corbin
Published: October 18th, 2023
The Securities and Exchange Commission is putting advisors on notice that in the coming year its examiners will be probing how firms manage conflicts of interest, how they promote their business through marketing materials, and their compensation arrangements.
It isn’t surprising that those are among many compliance areas the SEC’s Division of Examinations has outlined in its annual priorities list, a document that can be read as a compliance road map for advisors, brokers, and other registered entities subject to oversight by the commission.
What is more notable this year is what it left off. One conspicuous absence from the 2024 priorities is any mention of how advisors handle investments tied to environmental, social, or corporate governance factors.
In last year’s document, the commission included a section on how advisors and funds handle ESG-branded products and strategies, including “whether the funds are operating in the manner set forth in their disclosures” and whether they are “appropriately labelled and whether recommendations of such products for retail investors are made in investors’ best interest.”
ESG might not have made this year’s list, but that doesn’t mean the issue has faded from regulators’ attention, according to Joshua Broaded, head of global regulatory compliance at ACA Group, a business consulting firm. He notes that the SEC is in the midst of two rulemakings related to ESG and climate, one regarding corporate disclosures and another involving advisor and fund disclosures, and the commission’s Enforcement Division includes a well-staffed ESG and climate task force.
