Wednesday, March 1, 2017

Examinations focusing on Cyber for brokerage and securities firms

The banking industry has traditionally been the poster child of regulation. I’ve been dealing with federal and state regulators since I started in the industry back in the early 90’s. I can remember one of my first “IT Examinations” back in 1995 - The examiners at the time were more interested in getting up to speed on the rapidly evolving technology than they were with being able to provide direction to the bank. Those days are definitely over and many very talented and skilled examiners now exist at every agency that regulates banking.

Review of technical controls back then may have been a bit of a joke, but nowadays, it’s no laughing matter, which is evident by the ramping up of cyber-security by the examination body that regulates brokerage and securities firms – the OCIE.  While the OCIE has always been in place as an examining body of the SEC, the effort spent on IT was marginal at best - That is about to change.

Last year around this time, the OCIE came out with a Risk Alert that stated that they were going to be focusing  their efforts on cyber-security and published a document that illustrates what they will be looking for ( Additionally, the SEC came out with a document illustrating their Examination Priorities for 2017. (

Glancing through the appendix of the first document, the traditional banker wouldn’t bat an eye, but if you are a small securities firm, this is something that will likely give you pause. It discusses such topics as periodic assessments, vulnerability scans, and policies. These are not typically a problem and can be put in place rather quickly, but what about nebulous areas like data mapping, data classification, risk management, vendor management and incident response? That’s a heavy weight on the shoulders of a small IT staff – especially if most of those terms are unfamiliar!

The company I work for can help you put together a strategy for understanding where the gaps are and executing the project to close those gaps. Compliance initiatives are something we work with continually across many industries. Contact me for more information or if I can help in any way.

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