Cybersecurity Regulatory Reference Sheet – FINRA & SEC Rules and Regulations

Purpose: Establishes qualification standards for operations personnel.

Cyber Impact: Individuals supporting mission‑critical systems must demonstrate competence in secure data handling, system integrity, and fraud prevention.

Purpose: Broad ethical rule requiring high standards of integrity.

Cyber Impact: Material cybersecurity lapses (e.g., ignoring known vulnerabilities, mishandling client data) can trigger violations even when no specific cyber rule is cited.

Purpose: Requires firms to supervise associated persons and business activities.

Cyber Impact: Programs must supervise cyber hygiene, access reviews, vendor technology, and staff training. Common exam findings: outdated policies, missing periodic access reviews.

Purpose: Detect and report suspicious transactions.

Cyber Impact: Integrate cybercrime indicators (credential‑stuffing, anomalous logins, phishing‑induced transfers). See FinCEN Advisory FIN‑2016‑A005.

Purpose: Annual testing and verification of controls.

Cyber Impact: Annual supervisory reviews should include cyber exercises (phishing tests, breach tabletop drills, vendor evaluations).

Purpose: Written BCPs for significant business disruptions.

Cyber Impact: Plans must explicitly cover cyber incidents (ransomware, DDoS), recovery procedures, testing cadence, and response protocols.

Purpose: Mandates reporting of specified events to FINRA.

Cyber Impact: Evaluate whether a cybersecurity event (client harm, internal discipline) is reportable under Rule 4530 and coordinate with legal promptly.

Citation: 17 C.F.R. § 275.206(4)‑9 (Withdrawn)

Status: Proposed in 2022; officially withdrawn on June 12, 2025.

Original (not in effect): written cyber policies, annual effectiveness reviews, 48‑hour incident reporting (ADV‑C), vendor access governance.

Practice Insight: Despite withdrawal, examiners continue to benchmark programs against these principles. Firms that ignore breach response, vendor oversight, and documentation often receive exam comments.

Citation: 17 C.F.R. § 275.206(4)‑7

Requirements: Written program; annual review (including cyber controls); qualified CCO.

Cyber Impact: Weak cyber governance (no risk assessment, poor IT visibility for CCO, missing annual cyber review) is frequently cited under 206(4)‑7.

Citation: 17 C.F.R. §§ 248.1–248.30

Requirements: Safeguard customer information via administrative, technical, and physical controls; training; vendor oversight; secure disposal and encryption where applicable.

Update: Amendments effective August 2, 2024 strengthen breach response protocols and data retention governance.

Citation: 17 C.F.R. § 248.201

Requirements: Written identity theft prevention program; red‑flag detection and response; periodic updates and staff training.

Cyber Impact: Applies to RIAs offering covered accounts or transfers. Document detection protocols and test them.

Citation: 17 C.F.R. § 275.204‑2

Requirements: Maintain cybersecurity incident logs/communications for 5 years; retain evidence of policy reviews, testing, and breach responses.

Cyber Impact: Exam teams often request attempted/successful incident logs, board minutes, and any ADV‑C drafts—even if never filed.

Sections: 204 (15 U.S.C. § 80b‑4: recordkeeping) and 206 (15 U.S.C. § 80b‑6: anti‑fraud).

Cyber Impact: Used in enforcement where data breaches aren’t disclosed, or where marketing claims overstate cyber controls. Keep disclosures accurate and promptly notify clients as required.