Recently, the Securities and Exchange Commission increased the Enforcement Division’s ability to protect investors with the creation of two new initiatives. The SEC created a Cyber Unit that will focus on targeting cyber-related misconduct. Additionally, the SEC created a Retail Strategy Taskforce to implement initiatives that directly impact retail investors.
The Retail Strategy Task Force will look to use data analytics and technology to identify potentially large cases of fraud and misconduct affecting retail investors.
Not so long ago, two recent cyber events indicated the need for a Cyber Unit. In May of 2017, businesses were attacked by the WannaCry virus. In September of 2017, the SEC revealed that hackers had breached their systems. The SEC revealed that information from the SEC breach may have been used for illegal stock trades. Below details some of the Cyber Units Priorities.
The Cyber Unit will focus the Enforcement Division’s substantial cyber-related expertise on targeting cyber-related misconduct, such as:
- Market manipulation schemes involving false information spread through electronic and social media
- Hacking to obtain material nonpublic information
- Violations involving distributed ledger technology and initial coin offerings
- Misconduct perpetrated using the dark web
- Intrusions into retail brokerage accounts
- Cyber-related threats to trading platforms and other critical market infrastructure
The SEC has indicated they will continue to evolve their combat of Retail Fraud and Cyber Security. While the SEC augments their policies on Cyber Security, it is also a great time for your firm to review the policies and procedures that protect the firm from cyber-attack. If you need assistance in creating or updating your cyber security policy, Red Oak is here to help you.
About Red Oak Compliance Solutions
Red Oak Compliance Solutions is the global advertising review software of choice in the financial services industry. It is a comprehensive suite of SEC 17A-4 compliant features that are 100% books and records compliant and provides clients with 35% faster approvals and 70% fewer touches or better. We also offer Smart Review(SM), which solves for the storage and maintenance of disclosures, helping firms reduce risk, decrease review times, and increase the speed of distribution of marketing materials. Smart Registration(SM) automates the licensing and registration management process to help reduce regulatory risk and time spent on manual processes. Overall, Red Oak allows firms to minimize risk, reduce costs, and increase compliance review process effectiveness and efficiencies.