United States: The FY 2027 Exam Priorities Get a Pumpkin Spice Makeover

By: Thoreau A. Bartmann, Jennifer L. Klass, Meghan E. Flinn

It’s that time of year again. Like pumpkin spice, the US Securities and Exchange Commission (SEC) Division of Examinations’ (the Division) annual priorities arrive each fall, and they mostly taste the same. The FY 2027 list, released 23 October 2026, keeps last year’s general framework for advisers and funds: fiduciary duty, compliance programs, fees and expenses, portfolio management, never-examined firms, and cybersecurity. But a few new ingredients made it into the recipe, and a few old ones quietly left.

The New

• Economic conflicts, like fee rebates and cash management, consistent with the June 2026 risk alert on this topic.
• Reasonableness of valuation processes and product due diligence. SEC staff has focused on this for private credit and BDCs.
• Private fund controls and disclosures at both the fund and investment level, including credit lines and affiliated service providers.
• Adviser reliance on proxy advisory firms.
• Funds operating under exemptive orders. This is an interesting new addition, given the recent level of exemptive relief issued.
• Single-stock ETFs and zero-day options.

The Departed

• The amended Names Rule
• Fund mergers
• Fund AML
• Best execution and higher-cost products as adviser fiduciary items
• AI-washing (Then again, now that it’s “super intelligence,” perhaps the overselling is just built into the name?)

What It Means

• Firms should remain focused on the existence and disclosure of potential conflicts of interest and their processes for suitability assessments.

• Private credit issues now appear throughout. Interval fund, BDC, and private credit ETF sponsors should expect questions on valuation, redemptions, leverage, and how their products are sold.

• The exemptive order item is important. For firms with ETF share class or co-investment relief, compliance with the conditions may be tested.

• The Names Rule’s absence is likely just less of a focus now that the compliance date has passed.

• Finally, in addition to assessing registrants’ use of generative super intelligence in their businesses, the Division says it is integrating super intelligence into its own exams and risk assessments. Firms may want to make sure their data tells a consistent story, because the next examiner reading it may never need a pumpkin spice latte break…