Colorado Joins New York in Mandating Cybersecurity Controls for Financial Institutions

On the heels of the recently adopted New York State Department of Financial Services Cybersecurity Regulation (23 NYCRR 500), Colorado has followed suit with its own set of protections. The Colorado Division of Securities has issued cybersecurity regulations applicable to broker dealers and investment advisers registered with the state, which are codified in Sections 51-4.8 and 51-4.14(IA), respectively.,

Section 51-4.14(IA) requires covered entities to establish and maintain written cybersecurity procedures reasonably designed to ensure cybersecurity. The “reasonableness” standard appears to be a sliding scale, taking into account factors such as:

  1. the firm’s size;
  2. third party vendors;
  3. the extent of the firm’s cyber policies, procedures, and training;
  4. the firm’s use of electronic communications;
  5. auto-lock controls for devices with access to Confidential Personal Information; and
  6. the firm’s process for reporting of lost or stolen devices

Factors 5 and 6 appear to be concerned with mobile devices.

The Colorado cybersecurity regulation requires two things:

  1. Cybersecurity included as part of the adviser’s risk assessment; and
  2. Written cybersecurity policies and procedures which are reasonably designed, with “reasonableness” judged on the foregoing factors, and addressing the following:
  • Annual cybersecurity risk assessment of potential risks and vulnerabilities to the confidentiality, integrity, and availability of Confidential Personal Information
  • Use of Secure Email containing Confidential PI
  • Authentication practices for employee access to electronic communications, databases, and media
  • Procedures for authenticating client instructions received electronically (e.g. addressing the risk of wire fraud and identity theft); and
  • Disclosure to clients of the risks of using electronic communications

Colorado defines “Confidential Personal Information” to include a first name or first initial and last name, in combination with one or more items such as a social security number; driver’s license number or ID card number; account number plus security code/access code/password to gain access to the account; an individual’s digital or electronic signature, or user name / unique ID / email address plus password, access code, security questions or other authentication that would permit access to the account.

The Colorado cybersecurity regulations were adopted by the Colorado Division of Securities on May 19, 2017 and formally approved by the Colorado Attorney General on June 7, 2017. The regulations became effective July 15, 2017.

Ascendant has designed an offering which includes cybersecurity procedures, cybersecurity training, and cybersecurity testing specifically for firms impacted by the Colorado cybersecurity regulation. To learn more, contact us at info@ascendantcompliance.com.

Related Content

Latest Content

A New View of How Technology Will Change the Emerging Crytpo-Economy

From the top of the world, it’s amazing what you can see.  I recently had the opportunity to travel to the United Arab Emirates to speak in Dubai at the 7th Edition of the Alternative Investment Management Summit. While I was there, I took a few moments to ride to the top of the Burj … Continued

SEC Retail Investor Focus Turns Towards Registered Investment Companies

Earlier this year when the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced its 2018 examination priorities, OCIE stated that a core priority was to protect retail investors, including seniors and individuals saving for retirement. OCIE is now continuing this effort by focusing on mutual funds and exchanged-traded funds (together, the “Funds”) as the … Continued

SEC Alerts Investment Advisers to Review Solicitor Arrangements

On October 31, OCIE issued a new Risk Alert for investment advisers with solicitor arrangements. The SEC periodically releases risk alerts to notify the industry of deficiencies they are finding during examinations, and this latest alert puts investment advisers with solicitor arrangements on notice to check their solicitor agreements, policies and procedures, and disclosure documents. … Continued

Pennsylvania Sounds Warning Bell Over Client Credentials and Custody

The Pennsylvania Department of Banking and Securities (PDOBS) has indicated in recent guidance two concerns related to investment advisers using client credentials to access a custodial account(s). In the letter dated September 25, 2018, PDOBS indicates that the use of client credentials may create custody and is considered to be a dishonest and unethical practice. … Continued

San Diego 2018 Conference Gallery

Ascendant/CSS San Diego Conference Another compliance conference is in the books. We had a great time in San Diego, and we think our attendees did, too. We hope to see you in Miami! (Click on photos to view full size.)  

Mailing List

Subscribe to the Ascendant Compliance email list for the latest compliance resources, conferences, ComplianceCasts™, and more.

Loading form...

Contact Us

Ascendant works together with clients to identify and assess critical needs through customized plans. If you need assistance with compliance functions, regulatory services, cybersecurity or technology tools, we’d love to speak with you.