On June 9, 2026, the SEC Division of Examinations issued a Risk Alert, "Observations of Investment Adviser Obligations Related to Economic Conflicts of Interest," grounded in the adviser's fiduciary duty under the Investment Advisers Act and the Compliance Rule (Rule 206(4)-7).
## Focus: Economic Incentives
The alert focuses on economic incentives that advisers and their financial professionals may have when recommending products, services, account types, cash-management and sweep programs, custodial arrangements, or fee structures. Staff observed conflicts that were undisclosed, only partially disclosed, or described in language that could mislead clients and undermine informed consent.
## Recurring Observation Areas
Recurring areas included cash-management and sweep recommendations, "other revenue" opportunities, Form ADV disclosure gaps, advisory fees that deviated from the fee schedule in client agreements, and weaknesses in the compliance programs designed to surface and address these conflicts.
## What the Division Expects
The Division reminded advisers to (1) adopt adequate policies, procedures, and full-and-fair disclosures regarding economic conflicts; (2) implement and monitor those policies; and (3) actively identify and address new conflicts as the business changes. The staff noted that deficiencies can lead to remediation, client reimbursement, and, in serious cases, referral to the Division of Enforcement.
> Advisers should review their conflicts inventory, Form ADV disclosures, and fee-billing practices against this alert, paying particular attention to cash-sweep arrangements and any revenue the firm earns beyond its stated advisory fee.