SEC Brings First Cybersecurity Enforcement Proceeding In Wake Of Risk Alert

Highlights Areas of High Risk and Examination Priorities for Financial Industry Firms

On September 15, the U.S. Securities and Exchange Commission's (SEC's) Office of Compliance, Inspections and Examinations (OCIE), issued new guidance outlining areas of cybersecurity risk to be addressed by registered broker-dealers and investment advisers in their systems and procedures. The guidance, issued in the form of a "Risk Alert," sets forth examination priorities to be used by SEC examiners, in upcoming examinations of these firms. Just one week later, the SEC's Division of Enforcement filed its first enforcement action in the cybersecurity arena, against St. Louis investment adviser R.T. Jones Capital Equities Management, for violations surrounding an incident of hacking that exposed the firm's customers to risk of identity theft. Matter of R.T. Jones Capital Equities Management, Inc., Admin. Proc. File No. 3-16827, SEC Investment Advisers Act Release No. 4204 (Sept. 22,