Recently, several of our RIA clients have received suspicious emails claiming to be from FINRA. The suspicious emails used the subject line “New FINRA Request – (Firm Name),” and came from an email address with the domain, “@gateway-finra.org” Below is a screenshot of one of these suspicious emails.
January 08, 2021
On January 7, 2021, the North American Securities Administrators Association (NASAA) reminded state-registered investment advisers to report to their primary securities regulator any known issues or concerns related to a recent RIA cybersecurity incident.
The Securities Bureau of the Nebraska Department of Banking and Finance has proposed a new rule which would require investment advisers to develop and maintain physical and cybersecurity policies and procedures designed to protect client records and information.
May 31, 2019
SEC Risk Alert – Compliance Issues Related to Regulation S-P – Privacy Notices and Safeguard Policies
May 07, 2019
On April 16, 2019, the United States Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) issued a risk alert about “Compliance Issues Related to Regulation S-P – Privacy Notices and Safeguard Policies” to encourage investment adviser firms to review their written policies and procedures to, “ensure compliance with the relevant regulatory requirements.”
January 22, 2019
On December 3, 2018 the Nebraska Department of Banking and Finance (NDBF) released their 2018 Cybersecurity Survey of Nebraska-Registered Investment Advisers. NDBF surveyed fifty-seven Nebraska registered investment advisers. The survey focused on devices used in advisory activities, Wi-Fi access points, passwords, encryption policies, and anti-virus/anti-malware services. The full report can be viewed here.
October 09, 2018
The United States Securities and Exchange Commission (SEC) has recently fined an Iowa-based investment adviser $1 million for alleged cybersecurity failures that led to a data breach that compromised the personal information of its clients. According to the SEC, information from over 5,600 of the investment adviser’s clients was obtained by criminals impersonating independent advisers. The SEC claims that the intruders gained access through weaknesses within the firm’s cybersecurity procedures. Some of these weaknesses had been exposed during previous fraudulent activity. The investment adviser allegedly failed to update and fix those issues.
On August 7, 2017, the Office of Compliance Inspections and Examinations (“OCIE”) of U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert which details its examination of the cybersecurity preparedness of 75 broker-dealers, investment advisers and investment companies in the U.S. In comparison to prior cybersecurity examinations, this exam involved more active testing and validation of the firms’ procedures and controls related to cybersecurity. Click here to read the Risk Alert.
The Colorado Division of Securities recently proposed two new rules that would require investment adviser firms and broker-dealers to assess cybersecurity risks and implement written policies and procedures “reasonably designed to ensure cybersecurity.” Click here to read the Rulemaking Notice. Given the sensitive and confidential nature of their work, cybersecurity is an important and evolving concern for investment adviser firms.
December 29, 2016
The Financial Industry Regulatory Authority (“FINRA”) recently announced fines against 12 broker-dealers for alleged deficiencies related to their cybersecurity and record retention practices. In each case, the firms – who have consented to the fine without admitting or denying the charges – allegedly failed to properly store electronic records in a “write once read many” format that is meant to protect records from illicit alteration. The “write once read many” format is required by FINRA rules and protects broker-dealers against malicious interference with their vital business records, whether by outside hackers or disgruntled insiders.