Published On: March 2, 2016

Currently, the Securities and Exchange Commission (SEC) requires registered financial institutions, including broker-dealers, investment companies and investment advisers, to adopt written policies and procedures reasonably designed to ensure the security and confidentiality of customer information and records. In the past few years, the commission has grown increasingly focused on cybersecurity compliance. Today, investment firms and the like face the daily threat of a data breach or other cybersecurity event, such as hacking, phishing, spamming, bot-networking operating and the use of spyware and malware and other criminal activities. In 2016, the SEC’s cybersecurity compliance will “reflect certain practices and products that the Office of Compliance Inspections and Examinations perceives to present potentially heightened risk to investors and/or the integrity of the U.S. capital markets. In April, 2014, the SEC announced a series of examinations to identify and assess cybersecurity risks and preparedness in the securities industry. In February 2015, the Financial Industry Regulatory Authority (FINRA) released their own “Report on Cybersecurity Practices.” In September 2015, the SEC launched a second initiative to examine the cybersecurity compliance and controls in place at broker-dealers and investment advisory firms. Its concern came from public reports that had identified cybersecurity breaches related to weaknesses in basic data controls at firms.

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