Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comAuthor: Scarinci Hollenbeck, LLC|August 4, 2020
The Securities and Exchange Commission (SEC) is warning its registrants that they may be the target of sophisticated ransomware attacks. “The Office of Compliance Inspections and Examinations (OCIE) has observed an apparent increase in sophistication of ransomware attacks on SEC registrants, which include broker-dealers, investment advisers, and investment companies, and also ransomware attacks impacting service providers to registrants,” the Risk Alert states.
Ransomware attacks have become more common and harder to detect in recent years. Most ransomware attacks gain access to a company’s computer systems via an email attachment that appears legitimate, like an invoice or electronic fax. Once the employee opens it, the malware begins encrypting files and folders on local drives, any attached drives, backup drives, and potentially other computers on the same network. The attackers then demand a ransom payment in exchange for a decryption key.
On July 10, 2020, OCIE issued an alert informing registrants that one or more threat actors have orchestrated phishing and other campaigns designed to penetrate financial institution networks to, among other objectives, access internal resources and deploy ransomware. OCIE has also observed an apparent increase in sophistication of ransomware attacks on SEC registrants in which the perpetrators typically demand compensation (ransom) to maintain the integrity and/or confidentiality of customer data or for the return of control over registrant systems. In addition, OCIE has observed ransomware attacks impacting service providers to registrants.
In light of the increased risk, OCIE encourages registrants, as well as other financial services market participants, to monitor the cybersecurity alerts published by the Department of Homeland Security Cybersecurity and Infrastructure Security Agency (CISA), including the updated alert published on June 30, 2020, relating to recent ransomware attacks. It also encourages registrants to share this information with their third-party service providers, particularly with those that maintain client assets and records for registrants.
To help entities thwart ransomware attacks, OCIE noted that it has observed registrants using the following measures to enhance their preparedness:
Broker-dealers, investment advisers, and investment companies should heed the SEC’s warning. Even if the failure to do so does not lead to a costly data breach, it could still result in a costly SEC enforcement action. Cybersecurity has been a key examination priority for OCIE for many years, and the SEC has emphasized that information security is a key risk area on which registrants should focus.
If you have any questions or if you would like to discuss the matter further, please contact me, Maryam Meseha, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
The Firm
201-896-4100 info@sh-law.comThe Securities and Exchange Commission (SEC) is warning its registrants that they may be the target of sophisticated ransomware attacks. “The Office of Compliance Inspections and Examinations (OCIE) has observed an apparent increase in sophistication of ransomware attacks on SEC registrants, which include broker-dealers, investment advisers, and investment companies, and also ransomware attacks impacting service providers to registrants,” the Risk Alert states.
Ransomware attacks have become more common and harder to detect in recent years. Most ransomware attacks gain access to a company’s computer systems via an email attachment that appears legitimate, like an invoice or electronic fax. Once the employee opens it, the malware begins encrypting files and folders on local drives, any attached drives, backup drives, and potentially other computers on the same network. The attackers then demand a ransom payment in exchange for a decryption key.
On July 10, 2020, OCIE issued an alert informing registrants that one or more threat actors have orchestrated phishing and other campaigns designed to penetrate financial institution networks to, among other objectives, access internal resources and deploy ransomware. OCIE has also observed an apparent increase in sophistication of ransomware attacks on SEC registrants in which the perpetrators typically demand compensation (ransom) to maintain the integrity and/or confidentiality of customer data or for the return of control over registrant systems. In addition, OCIE has observed ransomware attacks impacting service providers to registrants.
In light of the increased risk, OCIE encourages registrants, as well as other financial services market participants, to monitor the cybersecurity alerts published by the Department of Homeland Security Cybersecurity and Infrastructure Security Agency (CISA), including the updated alert published on June 30, 2020, relating to recent ransomware attacks. It also encourages registrants to share this information with their third-party service providers, particularly with those that maintain client assets and records for registrants.
To help entities thwart ransomware attacks, OCIE noted that it has observed registrants using the following measures to enhance their preparedness:
Broker-dealers, investment advisers, and investment companies should heed the SEC’s warning. Even if the failure to do so does not lead to a costly data breach, it could still result in a costly SEC enforcement action. Cybersecurity has been a key examination priority for OCIE for many years, and the SEC has emphasized that information security is a key risk area on which registrants should focus.
If you have any questions or if you would like to discuss the matter further, please contact me, Maryam Meseha, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
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