SEC regulations for financial operations are an ongoing source of frustration for those in the industry. While many regulations serve to benefit financial institutions and protect clients, they also require a great deal of time and effort to implement and maintain. The SEC has many regulations around the way financial institutions handle sensitive information. The consequences of noncompliance include huge penalties, or worse, data breaches that can cost millions to remedy. So, which areas of your financial operations should you be watching closely?

  1. Electronic Communication

This is an area where risks can and will arise if compliance isn’t monitored closely. Given the current state of the world, however, this is the type of communication that is most abundant. According to SEC regulations, all communications with clients need to be logged and archived for proof of information and validity purposes. This includes communicating via email, instant messaging, or anything conducted from a mobile device, like text messaging. It is advised that companies prohibit forms of electronic communication that do not allow third-party viewing or backup or that delete messages automatically.

Electronic communication also includes social media – have you examined your policies around your staff’s use of social media? Those that are using personal social media accounts for business purposes or using it outside of the regulated environment may be in violation.

  1. Handling Sensitive Information

Dealing with personal financial information requires high levels of security. SEC regulations require an evaluation of cybersecurity risks to assess the threat level, and action must be taken to implement a cybersecurity solution. Financial institutions should also encrypt records and each staff members’ hard drive and laptop to prevent access to personal data. One relatively simple way to increase your security would be to move from an in-house server to a private cloud, which has greater reliability and offers multiple layers of security.

  1. Applications

There are many different applications used to accommodate clients in the financial industry, and each can pose a risk if not regulated. Multi-factor authentication, while not specifically required by SEC regulations, is a way to reduce threats and should be implemented for all internal applications and those that are web-based, like a VPN. This multi-factor authentication also logs who accesses the VPN, and there are measures that can be put in place to ensure that VPN connectivity only occurs from company supported laptops.

Is your current IT resource implementing the correct security measures for your business? SEC regulations for financial operations are constantly evolving, sometimes leading to a lapse in compliance. You need to work with your IT partner to stay ahead of these regulations so they don’t disrupt operations when they arrive. It is also beneficial to schedule ongoing security awareness training sessions with your IT partner to inform employees of new risks or threats that need prevention.


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