October 29, 2026
On October 23, 2026, the SEC’s Division of Examinations announced the release of its Fiscal Year 2027 Examination Priorities, outlining the areas where examiners expect to concentrate their attention during the coming year. The priorities reflect the SEC’s continuing focus on investor protection and market integrity, but they also reveal several emerging concerns, particularly involving artificial intelligence, private markets, cybersecurity, and evolving market infrastructure.
For potential whistleblowers, the SEC’s examination priorities offer important clues about the types of misconduct the SEC may be especially interested in receiving.
The Core Areas of Focus
1. Protection of Retail Investors: The SEC remains concerned about the sale of complex, higher-risk products to retail investors, including recommendations by investment advisers and broker-dealers that retail investors purchase illiquid or difficult-to-value investments. Examiners will review recommendations involving:
- Private credit and private equity products
- Structured products
- Alternative investments
- Exchange-traded funds (ETFs), including inverse and leveraged ETFs and single-stock ETFs
- Zero-days-to-expiration (0DTE) options
- Variable and registered index-linked annuities
The SEC will also examine whether firms adequately analyze reasonably available alternatives and properly satisfy Regulation Best Interest (Reg BI) obligations and anti-money laundering (AML) programs.
2. Investment Adviser Fiduciary Duties and Conflicts of Interest: The SEC continues to prioritize whether registered investment advisers are meeting their fiduciary obligations, particularly when recommending investments to retail investors and retirement savers. Examiners will focus on:
- Undisclosed or inadequately disclosed conflicts of interest
- Fee and expense calculations
- Cash management practices
- Suitability of investment recommendations
- Valuation methodologies
- Reliance on third-party service providers
3. Cybersecurity and Operational Resilience: Cybersecurity remains one of the SEC’s highest examination priorities. Examiners will scrutinize:
- Data-loss prevention controls
- Access controls and account management
- Incident-response procedures
- Ransomware preparedness
- Third-party vendor oversight
- Compliance with Regulation S-P and Regulation S-ID
There is increasing concern about threats arising from interconnected technology providers and risks to customer information.
What’s New in 2027?
Several emerging areas of concern stand out.
- Super Intelligence and Advanced AI: Perhaps the most notable addition is Division of Examinations’ focus on “super intelligence” (SI) and advanced AI systems and concerns that firms are increasingly using AI for:
- Investment analysis
- Portfolio management
- Client communications
- Coding and software development
- Compliance monitoring
- AML surveillance
- Fraud detection
The SEC plans to examine whether firms’ use of AI remains consistent with existing regulatory obligations and whether public disclosures accurately describe how these technologies are being used.
Regulators are equally concerned about AI-enabled misconduct, including:
- Deepfake communications
- Synthetic voice fraud
- AI-generated phishing attacks
- Algorithmic recommendations that may not align with client interests
This marks a significant expansion of SEC oversight beyond traditional technology controls to include the governance and risks associated with the deployment of advanced AI systems.
- Tokenization and Market Infrastructure: The SEC also elevated its concern about evolving market infrastructure, including:
- Treasury clearing reforms
- Tokenization of securities
- Digital trading systems
- Extended trading hours
- Cloud-based market infrastructure
As financial markets modernize, examiners will increasingly focus on whether firms have controls capable of managing the associated risks.
- Greater Regulatory Coordination: Another notable development is the SEC’s emphasis on coordination with other regulators, including the Commodity Futures Trading Commission (CFTC), FINRA, and foreign regulators.
The agency highlighted enhanced information-sharing and the possibility of more coordinated examinations across regulatory bodies. Firms should therefore expect that issues identified in one regulatory context may attract scrutiny from other regulators.
What This Means for Whistleblowers
For whistleblowers, these examination priorities provide a window into areas that are likely to get the attention of the SEC. As a result, employees or others who observe misconduct in these disclosed priority areas for FY2027 may possess information that is particularly valuable to regulators.
Conclusion
The SEC’s 2027 Examination Priorities remain focused on traditional compliance risks such as investment adviser and broker-dealer conduct, and retail investor protection while expanding to include the use of AI, complex investments, and emerging market infrastructure. Individuals with credible information about potential federal securities law violations should pay close attention to these priorities, and consider reporting their information to the SEC.
About the Author
Christina McGlosson, special counsel in Cohen Milstein’s Whistleblower practice, focuses exclusively on Dodd-Frank Whistleblower representation She is the former acting director of the Whistleblower Office in the Division of Enforcement at the U.S. Commodity Futures Trading Commission. She was a senior attorney in the SEC’s Division of Enforcement, where she assisted in drafting the SEC rules to implement the whistleblower provisions of Dodd-Frank and served as Senior Counsel to the Director of the SEC’s Division of Enforcement and to its Chief Economist.