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This article was written by Carne, an international specialist in the provision of independent governance services and European management company solutions to the global asset management industry.

A recent SEC action has highlighted how concerned regulators have become about data intrusion risks in the asset management sector.

Last month the Securities and Exchange Commission settled charges with an investment adviser that the regulator alleged had failed in its duty to protect client data from hackers, in this case thought to be based in China. The SEC claimed the St Louis-based firm did not conduct regular security assessments, failed to encrypt sensitive data and did not install a firewall. Consequently, the hackers were able to access details of more than 100,000 clients.

This marks the first enforcement action of its kind for the SEC. Although no actual direct financial loss seems to have been caused, the fund manager settled charges with a fine of US$75,000. If any loss of money had been inflicted on the firm or its clients by hackers, the fine could have been far higher.

In addition, on 15 September, the SEC issued an alert which outlined the steps it would be taking in its examinations to assess cyber security risks and preparedness in its security industries inspections. It includes a governance and risk assessment, and indicates that the SEC will now be focusing on proper implementation and operation of cyber security policies and procedure......................

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