Cybersecurity Best Practices For Broker-Dealers

The U.S. Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority ("FINRA") recently released their respective annual reports setting out their priorities for the year ahead. Not surprisingly, the reports reiterate cybersecurity as a top priority and remind broker-dealers once again of the importance of instituting best practices to mitigate the risk of cybersecurity incidents. We summarize below key areas for consideration and provide recommendations for firms to consider in light of the growing nature of cybersecurity threats.

Background

In its 2024 Examination Priorities Report, the SEC reiterated its focus on cybersecurity noting that the SEC will continue to review broker-dealers' practices, policies, and procedures to safeguard customer information, with a heightened focus on the firms' use of third-party vendors.¹ The SEC is also considering rules that would require broker-dealers to establish and implement written