Crowdfunding Portals Beware!

Because 88% of SEC tested broker-dealers and 74% of investment advisers have experienced cyber attacks, the head of the Securities and Exchange Commission’s Division of Enforcement is telling financial institutions that a cyber breach may also result in a violation of SEC rules (i.e., Regulation SP).

Reg. SP requires financial institutions to provide its clients with its privacy policy and to protect clients from the disclosure of their confidential personal information maintained on the institution’s servers.

Failure to do even the basics, like encrypting client’s data, may bring civil penalties.

While crowdfunding portals are generally not covered by the regulation, because they typically store information about a person’s accredited status, they should take similar precautions to protect their customers.

http://www.marketwatch.com/story/a-crackdown-is-coming-on-firms-with-lax-cybersecurity-2015-10-16

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
This entry was posted in Uncategorized and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.