On April 16, the SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert highlighting Regulation S-P compliance deficiencies and issues it found in recent examinations of broker-dealers and investment advisers.  Regulation S-P is the primary SEC rule detailing the safeguards these firms must take to protect customer privacy.  The Risk Alert provides an important reminder for firms to assess their supervisory and compliance programs related to Regulation S-P and make any necessary changes to strengthen those systems.  Indeed, in light of the substantial fines that can accompany a finding that Regulation S-P has been violated, firms must pay careful attention to the OCIE’s guidance regarding potential pitfalls.
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On October 16, 2018, the Securities and Exchange Commission (SEC) issued a report on the results of investigations made by the SEC’s Division of Enforcement into nine public companies that were victims of cyber-related frauds.  In each case, the SEC investigation focused on whether the target companies had complied with the applicable requirements of the Securities Exchange Act of 1934, as amended (Act). The Act requires public companies to devise and maintain a system of internal control over financial reporting designed to provide reasonable assurance that, among other things, transactions are executed in accordance with company management’s authorization, that transactions are properly recorded and that access to assets is permitted only with management’s authorization.

Ultimately, the SEC did not pursue enforcement actions against any of these companies, but released the report to advise public companies that cyber-fraud incidents must be taken into account when designing and maintaining internal control procedures.
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On April 25, the Securities and Exchange Commission announced a settlement with Yahoo that constituted its first enforcement action against a public company for failing to disclose a data breach.

This settlement demonstrates that companies in post-data breach environments must engage in a thorough, fulsome analysis of whether to disclose the cybersecurity incident in their

As previously reported, the U.S. Securities and Exchange Commission (SEC) unanimously voted to approve additional guidance for reporting cybersecurity risks last month. However, it is unclear what, if any, impact the new guidance will have on the rate of SEC enforcement actions in the coming months.

According to a recent study by the NYU

Last week, as previously reported, the U.S. Securities and Exchange Commission (SEC) unanimously voted to approve additional guidance for reporting cybersecurity risks. The release of this guidance underscores the SEC’s intent to prioritize cybersecurity compliance in 2018. The SEC may bring action against boilerplate cybersecurity disclosures that are not specifically tailored to address unique

On November 16, 2017, U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton announced in a symposium on cybersecurity and financial crimes that the SEC would start taking enforcement action against coin offering issuers who fail to register with the SEC.

As cryptocurrencies, like Bitcoin, have become increasingly popular, startup companies have turned to a

On Friday, May 12, the WannaCry ransomware attack struck hundreds of thousands of users across the globe, causing major disruptions in private and public networks. The attack, which encrypts a user’s files and holds them for ransom, may infect a computer without any action taken by the user.  With similar attacks expected, and as we

The inspector general (IG) of the U.S. Securities and Exchange Commission (SEC) reported last week that the SEC has not sufficiently implemented information technology security upgrades in order to protect highly sensitive information from data breaches. The IG reported that SEC officials failed to deactivate idle user accounts, did not ensure that owners kept their

On May 9, 2016, the International Swaps and Derivatives Association, the European Banking Federation, and the Global Financial Markets Association (comprised of three other industry associations, including the Securities Industry and Financial Markets Association) published a set of common principles to promote effective global policymaking on cybersecurity, data and technology (the Principles). These industry groups

Technology DisputesOn January 11, 2016, the Securities and Exchange Commission announced the 2016 examination priorities list. For the third year in a row, cybersecurity is a top concern, especially with regard to internal security program assessment and evaluation.  This year the Office of Compliance Inspections and Examinations (OCIE) will focus on cybersecurity protocols implemented by financial