Registered Investment Advisors (RIAs) are navigating a shifting regulatory landscape defined by a major overhaul of the SEC Enforcement Manual, upcoming Regulation S-P deadlines (for smaller firms), and a recalibration of examination priorities. While some aggressive proposals from previous years were withdrawn in mid-2025, the current focus has sharpened on operational resiliency and the integration of Artificial Intelligence (AI).
1. Major 2026 Enforcement Manual Update
On February 24, 2026, the SEC released the first significant update to its Enforcement Manual since 2017. This update fundamentally changes how RIAs interact with the Commission during investigations:
- Structured Wells Process: Recipients now have a strict four-week clock to respond to a Wells notice, with a guaranteed follow-up meeting involving senior Division leadership.
- Simultaneous Settlements and Waivers: Reversing previous policy, the SEC now considers settlement proposals and regulatory waiver requests at the same time, providing firms with immediate clarity on whether they can continue certain business operations after a settlement.
- Criminal Referral Framework: The manual now outlines a formal six-factor test for referring matters to the DOJ, emphasizing "exemplary cooperation" and documented remediation as key mitigating factors.
2. Looming Regulation S-P Deadlines
Modernizing data protection remains a top priority under the amended Regulation S-P:
- Small Entity Compliance: While "large" RIAs (over $1.5 billion AUM) were required to comply by December 2025, "smaller" RIAs must meet the new requirements by June 3, 2026.
- New Mandates: Firms must implement written incident response programs, provide specific data breach notifications to clients, and enhance oversight of third-party service providers.
3. 2026 Examination Priorities: AI and Fiduciary Duty
The SEC's 2026 Examination Priorities signal a deep dive into how firms manage complex technology and assets:
- AI Governance: Examiners are reviewing how firms evaluate AI tools before deployment, monitor for accuracy and "hallucinations," and ensure that AI usage matches client disclosures.
- Marketing Rule Scrutiny: Despite being in effect for years, the SEC issued a fresh Risk Alert in 2026 targeting ongoing deficiencies in testimonials, endorsements, and third-party ratings, particularly focusing on "clear and prominent" disclosures.
- Private Fund Integration: While no longer a standalone priority, private fund oversight is now embedded across all exam areas, with a focus on valuation practices and differential treatment of investors.
4. Notable Delays and Proposals
- AML Rule Postponed: FinCEN has officially delayed the effective date for RIA Anti-Money Laundering (AML) programs from 2026 to January 1, 2028, to allow for further review and potential amendments.
- Small Entity Redefinition: In January 2026, the SEC proposed raising the "small entity" thresholds for RIAs to account for decades of asset growth, potentially reducing the regulatory burden for a larger segment of the industry.
