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FINRA Fines Independent Broker-Dealers Over Cybersecurity Lapses

Posted on April 22nd, 2024 at 11:31 AM
FINRA Fines Independent Broker-Dealers Over Cybersecurity Lapses

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï

The Financial Industry Regulatory Authority (FINRA) has imposed fines and censured independent broker-dealers Osaic ÍøÆØ³Ô¹Ïalth and Securities America for cybersecurity deficiencies that led to hackers accessing the private information of more than 32,000 customers.

Osaic, formerly Royal Alliance Associates, and Securities America agreed to pay fines of $150,000 each for failing to establish and maintain adequate written supervisory procedures to safeguard client records and information, as outlined in a settlement letter known as an Acceptance, Waiver and Consent (“AWC”).

AdvisorHub reports that from January 2021 to March 2023, unauthorized third parties could access sensitive information, including social security numbers, bank account details, and driver's license information, affecting approximately 28,000 customers of Osaic and 4,640 clients of Securities America.

FINRA examiners previously had alerted both firms about deficiencies in their cybersecurity controls at branch offices before the breaches occurred. Although the broker-dealers self-reported the incidents to FINRA, they accepted the penalties without admitting or denying the allegations, according to the AWC.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

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