New Marketing Rule, AI in SEC Examiners' Crosshairs

Two exam priority areas for the Securities and Exchange Commission this year are the agency’s new Marketing Rule as well as advisors’ use of artificial intelligence, according to Natasha Vij Greiner, deputy director of the SEC’s Division of Examinations.

“You’re going to see us focusing on marketing in almost every exam,” Greiner said Thursday at the Investment Adviser Association’s annual compliance conference, held in Washington. “How do you look at a firm without looking at their marketing materials?”

Greiner — who was recently named the new director of the Division of Investment Management, starting Friday — stated that the agency also continues to do focused exams regarding the new Marketing Rule.

Greiner also signaled that the agency hopes to share some observations — possibly in a risk alert — about what exams have revealed in the last year in terms of ”what’s going well and what’s not” with marketing rule compliance.

Some firms still “have no idea that this rule even came out,” Greiner said.

The agency warned last June in its second Risk Alert related to Marketing Rule compliance that it was beefing up exams of advisors’ compliance with the rule by zeroing in on testimonials and endorsements, third-party ratings and Form ADV.

The first Marketing Rule Risk Alert, released Sept. 19, 2022, warned of other areas that SEC examiners would start focusing on in exams.

Exams on AI

As to AI, the exam division “is really focused on advisors, and all registrants’ use of AI,” Greiner relayed. “In terms of exams, we’re paying attention to disclosures.”