More On Legal & Compliancefrom The Advisor's Professional Library
- Where Are We Headed? The ultimate compliance goal is to help ensure that everyone associated with an advisory firm acts ethically at all times. Advisors and RIAs should do the right thing, even when regulators are not looking over their shoulders.
- Whistleblowers A whistleblower is any individual providing the SEC with original information related to a possible violation of federal securities law. The Dodd-Frank Act established a whistleblower program that enables the SEC to reward individuals who voluntarily provide such information.
Regulators in Massachusetts and Illinois are polling investment advisors registered in the states on their cybersecurity policies and practices.
Massachusetts securities regulator William Galvin said Tuesday that advisors’ responses could prompt changes in the state’s current regulations.
The survey includes 23 questions and covers firms' policies and procedures on cybersecurity, including types of authentication, encryption software, types of hardware, electronic backup and arrangements with third-party providers, as well as costs and insurance coverage.
Advisors in both states must complete the survey by June 24.
Tanya Solov, director of the Illinois Securities Department, told ThinkAdvisor that Illinois' survey includes "very slight revisions [from Massachusetts'] to account for Illinois law."
“With the almost universal reliance on computer trading and communication, it is essential that investors can be confident that their financial data is secure from unauthorized intrusion from whatever source,” Galvin said in a statement. “This survey will assist the Securities Division in deciding if changes are necessary in its regulations and policies for state-registered investment advisors.”
One of the 23 questions asks advisors to gauge the financial impact any new regulations or procedures implemented by the Massachusetts Securities Division would have on their firm.
The questionnaire comes on the heels of cybersecurity exam sweeps of broker-dealers and advisors that are now being conducted by the Securities and Exchange Commission and the Financial Industry Regulatory Authority. Both regulators have listed cybersecurity as one of their top priorities this year.
Check out Cybersecurity Crackdown: Where SEC, FINRA Will Strike on ThinkAdvisor.