Compliance experts urge vigilance despite SEC rules pullback
While the Securities and Exchange Commission (SEC) has decided to withdraw several rule proposals that would have applied to RIAs, compliance experts said advisors and executives shouldn’t take their eye off the ball as the regulatory agency is expected to continue evaluating the underlying issues in examinations.
The SEC under the Biden administration issued rule proposals that sought to govern advisors’ use of third-party vendors and artificial intelligence (AI), as well as their cybersecurity and asset custody practices, only to have those proposals scrapped earlier this month by the Commission. The agency is now chaired by president Donald Trump’s nominee, Paul Atkins.
In its own guidance, compliance consultancy STP Investment Services urged RIAs to monitor developments with the Treasury’s Financial Crimes Enforcement Network (FinCEN) which promulgated the rule. STP further encouraged RIAs to implement cybersecurity programs that document risks and adequately train employees. Diligence on third-party service providers also remains critical.
‘For firms that have already invested time and resources to implement aspects of the withdrawn rules, those efforts are not in vain as many of these frameworks include components that are recommended as best practices,’ said Cynthia Kelly, managing director of compliance at STP. ‘This is an ideal time to reaffirm cybersecurity protocols, vendor oversight processes and governance controls.’
Read what Cynthia and other subject matter experts had to say in Citywire RIA here.
