Cybersecurity & 2017 SEC Exam Priorities

In September 2015, the SEC announced it was starting Phase 2 Cybersecurity Exam Initiative exams in which the SEC started doing more in-depth testing of policies, procedures and controls at firms. For example: testing a firm’s access provisioning policy by standing over the shoulder of various employees to confirm whether they could or couldn’t access certain files and folders on the network.

In January 2016, the SEC’s Exam Priorities announced a continuation of the Phase 2 exams.

Now in January 2017, it appears that Phase 2 is over, and this more in-depth testing has found its way into SEC examinations in general.

Granted, some exams might not focus on cybersecurity at all, but the ones that do are likely to now include a more in-depth examination of it, and the SEC will be looking to corroborate that you are doing what your policies say you are doing, and that you have policies on things they expect you to have policies on when it comes to cyber.

At the upcoming Ascendant Compliance Management conference, “Revolutionizing Compliance: The Matrix of Regulation, Operations & Technology,” we will be covering things on the SEC’s cybersecurity request list – what documentation they expect, what types of controls they expect, what policies they expect; how to test various policies ahead of time; ways to improve your firm’s training and security awareness program – since some firms are being called out for inadequate cyber training and since the SEC is using the benefit of hindsight to fine firms that have a cyber incident that comes to light during an exam.

Translation: more training reduces the likelihood of a cyber incident in the first place.

If you need to gain a deeper understanding of the SEC’s views of cybersecurity and how it might affect your firm, join us in Naples on April 3-5. For more information, read our agenda by clicking here.


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CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.

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