Broker-Dealer Cybersecurity: Protect Yourself or Pay the Price

In its recently issued 2014 Regulatory and Examination Priorities Letter, FINRA stated that cybersecurity remains a priority given the ongoing cybersecurity issues reported across the financial services industry, including the increasing frequency and sophistication of attacks targeting the nation’s largest financial institutions. The securities industry watchdog continues to be concerned with the integrity of firms’ infrastructure and the safety and security of sensitive customer data. Broker-dealers are well-advised to ensure that their data security systems and procedures are up-to-date, since the financial and, more important, reputational impacts of adverse examination findings or enforcement actions can be devastating.

THE REGULATION -

The applicable regulatory framework governing broker-dealer cybersecurity includes the SEC’s Regulation S-P (Privacy of Consumer Financial Information). Specifically, Rule 30 (the so-called Safeguards Rule) requires brokers, dealers, investment companies and investment advisers registered with the Commission to...

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