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SEC Potentially Targets CCOs for Cybersecurity Lapses

By Judy Selby and Jonathan A. Forman
November 02, 2015

Two recent speeches by Securities and Exchange Commission (SEC) officials likely got the attention of every Chief Compliance Officer (CCO).

In the first, at an Investment Adviser and Broker-Dealer Compliance Conference last month, SEC Chief of Staff Andrew J. Donohue indicated that the SEC will continue to bring enforcement actions against CCOs for not addressing compliance issues, including cybersecurity. Donohue challenged compliance professionals to be “pro-active” in their work and pointed to three recent SEC enforcement actions against CCOs on the ground that they failed to implement compliance programs reasonably tailored to the specific needs of their firms. See, “Remarks at NRS 30th Annual Fall Investment Adviser and Broker-Dealer Compliance Conference.”

Two days after Donohue's speech, SEC Chair Mary Jo White told the MFA Outlook Conference in New York: “While cybersecurity attacks cannot be entirely eliminated, it is incumbent upon private fund advisers to employ robust, state-of-the-art plans to prevent, detect, and respond to such intrusions.” See, “Five Years On: Regulation of Private Fund Advisers after Dodd-Frank.”'

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