Maximizing Preparedness: Get Ahead of the 2025 SEC Exams

Why a mock exam is a game-changer

With a new administration in place in the U.S., the regulatory outlook for investment advisers remains uncertain. While the Securities and Exchange Commission's (SEC’s) Division of Examinations released its 2025 priorities in October 2024 under the prior administration, shifts in enforcement philosophy, resource allocation, and rule implementation could reshape the agency’s approach.

It remains unclear whether the SEC will shift its enforcement and examinations focus, introduce new regulatory initiatives, or prioritize refining existing rules—but firms must be prepared for any scenario.

Regardless of how priorities evolve, investment advisers should expect continued scrutiny in key areas such as fiduciary responsibility, marketing practices, and cybersecurity.

Key areas of SEC focus in 2025 include:

• Fiduciary duty and standards of conduct: The SEC remains focused on whether investment advisers are acting in clients' best interests, with particular attention to conflicts of interest, fee transparency, and revenue-sharing arrangements.
• Cybersecurity and data protection: Amendments to Regulation S-P require stronger controls around client data protection and breach reporting, areas where the SEC is expected to intensify its oversight.
• AI and emerging technologies: The use of artificial intelligence in investment decisions is under greater scrutiny, as regulators assess whether firms have sufficient safeguards in place to manage the risks tied to automated processes.
• Shift in examination and enforcement focus: While it is unclear whether enforcement activity will increase or shift in scope, firms should be prepared for rigorous examinations aimed at detecting fraud, misleading marketing practices, and compliance program deficiencies.

Regardless of the specific direction the SEC takes, firms should ensure their compliance programs are well-documented, rigorously tested, and structured to withstand close regulatory review.

Mock exams: A critical tool for readiness

Mock exams have moved far beyond simple policy and procedure reviews. Today, they are a key component of a firm’s compliance program—helping to uncover risks before they become serious regulatory issues.

Examiners increasingly rely on trade data to identify trends, inconsistencies, and high-risk activity. Firms conducting mock exams with similar analytics can anticipate how their records, disclosures, and internal controls might be interpreted under review. This approach strengthens compliance and offers a clearer view of potential vulnerabilities.

Ensuring compliance readiness is not just about avoiding regulatory penalties—it’s also critical for maintaining investor confidence in an unpredictable regulatory environment.

How mock examinations strengthen compliance

A well-designed mock SEC exam is one of the most effective ways to prepare for an actual regulatory review. By simulating regulatory scrutiny, firms can assess the strength of their compliance programs and proactively address potential issues before they escalate.

Key benefits of conducting a mock SEC exam include:

• Uncovering compliance gaps: Mock exams reveal weaknesses in policies, procedures, and documentation, giving firms the opportunity to correct issues before they become regulatory findings.
• Improving response readiness: Understanding what to expect in an SEC exam helps compliance teams respond more efficiently to document requests and inquiries.
• Demonstrating a commitment to compliance: Proactively conducting mock exams signals to regulators - and investors - that the firm prioritizes compliance and maintains strong oversight.
• Enhancing internal oversight: Routine testing of compliance processes strengthens internal controls and reduces the risk of enforcement actions.

Preparing for a 2025 mock SEC exam

To stay ahead of regulatory scrutiny, firms should structure their mock exams around key risk areas, including:

• Cybersecurity protocols: Test adherence to updated data protection rules and breach notification requirements.
• Marketing and advertising compliance: Ensure marketing materials meet SEC requirements around performance claims, substantiation, testimonials and endorsements, and required disclosures.
• Use of technology and AI: Reviewing automated decision-making processes for compliance risks and conflicts of interest.
• Regulatory documentation and reporting: Verifying the accuracy and completeness of Form ADV disclosures, financial statements, and client communication policies.

Find confidence amid uncertainty

With uncertainty surrounding the SEC’s next steps, investment firms must take a proactive approach to compliance. SEC reviews are becoming more data-driven and detailed, and firms that conduct regular mock exams are better positioned to adapt to shifts in regulatory scrutiny.

By identifying risks early, strengthening internal controls, and aligning policies with both current guidance and potential shifts, firms can reduce regulatory exposure and reinforce investor trust. With former SEC examiners on our team, ACA offers firsthand insight into regulatory expectations, helping firms prepare for whatever comes next.

In an industry where confidence is critical, demonstrating a strong compliance culture is just as important as meeting regulatory requirements.

How we help

At ACA Group, we help firms launch, grow, and protect their businesses with tailored compliance solutions—including mock SEC exams designed to mitigate regulatory risks and enhance program effectiveness.

Whether you are preparing for your first SEC exam or refining an existing compliance program, our team of experts delivers practical guidance to help you stay ahead of enforcement trends.

To support your preparation, we offer:

• A regulator’s perspective: Our mock SEC exam team, made up of former regulators, mirrors the SEC’s evolving data-driven approach, from document requests to trade analysis, providing actionable feedback to strengthen your compliance program.
• Technology-driven mock exams: We integrate ComplianceAlpha^® Market Abuse Surveillance, using algorithms modeled on the SEC’s National Examination Analytics Tool (NEAT) to assess risk exposure in line with regulatory expectations.

Contact us to learn how our experts can help your firm prepare for regulatory scrutiny with tailored mock exam solutions.

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