The Securities and Exchange Commission plans to take a close look at potential conflicts of interest in the investment-advisor practices that its examiners oversee, and will ramp up scrutiny of the marketing and performance claims of federally registered advisors, according to the examination guidance the agency recently issued for the coming year.
As the SEC zeroes in on "areas that are perceived by the staff to have heightened risk," examiners will be on the lookout for conflicts stemming from undisclosed forms of compensation, such as fees and solicitation arrangements, referrals to affiliated entities and payment from specific funds and fund platforms or other third parties.
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