More On Legal & Compliancefrom The Advisor's Professional Library
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations said Tuesday that it has launched cybersecurity-related exams of more than 50 registered broker-dealers and registered investment advisors.
In its National Exam Program Risk Alert, OCIE provides BDs and advisors with a list of questions to help them assess their firms’ cybersecurity compliance as well as a sample cybersecurity document request that they can expect from the division.
OCIE is assessing BDs and advisors’ cybersecurity governance, identification and assessment of cybersecurity risks, protection of networks and information, risks associated with remote customer access and funds transfer requests, risks associated with vendors and other third parties, detection of unauthorized activity, and experiences with certain cybersecurity threats.
These exams “will help identify areas where the commission and the industry can work together to protect investors and our capital markets from cybersecurity threats,” the OCIE staff said in the alert.
Some of the questions in the alert track information outlined in the Framework for Improving Critical Infrastructure Cybersecurity, released Feb. 12 by the National Institute of Standards and Technology. But OCIE warns BDs and advisors that the questions in the alert should not be considered "all inclusive" of the information that OCIE may request. Accordingly, "OCIE will alter its requests for information as it considers the specific circumstances presented by each firm’s particular systems or information technology environment."
At a March 26 cybersecurity roundtable held by the SEC at its Washington headquarters, SEC Chairwoman Mary Jo White underscored the importance of cybersecurity surveillance in protecting the integrity of the nation’s market system and customer data.
SEC Commissioner Luis Aguilar suggested that the commission should establish a cybersecurity task force, with members from each division.
Daniel Sibears, executive vice president of regulatory operations and shared services at FINRA, noted at the roundtable that the top risks broker-dealers face in dealing with cybersecurity threats are operational risk, “insider” risks posed by rogue employees and hackers penetrating BD systems.
For advisory firms large and small, “account takeover is the No. 1 risk” when it comes to cybersecurity, added David Tittsworth, executive director of the Investment Adviser Association in Washington. Account takeovers have “grown in frequency in the last year or two,” he said.
Check out Some American Funds Clients Vulnerable to Heartbleed Bug on ThinkAdvisor.