SEC Releases 2026 Exam Priorities, Signaling Heightened Scrutiny of Private Markets
The U.S. Securities and Exchange Commission has released its 2026 examination priorities, offering firms an early roadmap for where the agency will focus its supervisory firepower in the year ahead. The document places particular emphasis on the rapid expansion of private-market products—especially those increasingly targeted toward individual investors—as regulators adjust to the shifting investment landscape.
For fiscal year 2026, the SEC’s Division of Examinations will continue its oversight of core areas such as fiduciary duty, standards of conduct, and the custody rule, while also evaluating firms’ compliance with newly adopted regulations, including the 2024 amendments to Regulation S-P, which strengthen requirements for safeguarding consumer financial data.
A major theme is the rise of alternatives in retail portfolios. Examiners plan to scrutinize:
- Private credit and private fund products featuring long lock-up periods
- ETF wrappers holding less liquid underlying strategies, including options-based or leveraged ETFs
- Higher-cost investment products, where fees may pose suitability or disclosure risks
Staff will also focus closely on whether investment recommendations align with clients’ disclosed objectives, risk tolerance, financial circumstances, and stated preferences. This includes enhanced review of:
- Advisors to private funds who also manage separately managed accounts (SMAs) or newly registered funds
- Advisors newly entering the private-funds space, with oversight extending to liquidity, valuation practices, fee structures, side-letter arrangements, and any differential treatment of investors
“Examinations are an important component to accomplishing the agency’s mission, but they should not be a ‘gotcha’ exercise,” said SEC Chairman Paul S. Atkins. “Today’s release of examination priorities should enable firms to prepare to have a constructive dialogue with SEC examiners and provide transparency into the priorities of the agency’s most public-facing division.”
According to the notice, examiners will prioritize reviews of ETFs holding illiquid assets such as private equity or private credit; municipal products like 529 plans; private placements; structured products; and other alternative investments that may involve complex fee structures, opaque return profiles, or exposure to exotic benchmarks. Regulators will also scrutinize products experiencing rapid growth among retail investors.
