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.

Latest Content

Ascendant’s Jason Morton to Speak on RegTech at Strata Data Conference

Alongside technology experts from American Express, Credit Suisse and CIBC, Ascendant’s Jason Morton will speak on developments in regulatory technology at the ‘Fintech Data Day’ at the annual Strata Data Conference on September 26, 2017 in New York. The Strata Data Conference is an annual conference for technology and business professionals who are seeking innovative … Continued

Hurricane Season: How Does your BCM Program Stack Up?

As Hurricane Harvey touches down on U.S. soil and we hope for the safety of the millions in its path, we encourage all firms, even those outside Harvey’s path of flooding and damaging winds, to consider their BCM readiness for such an event. Business Continuity Plans are designed to ensure firms have conducted sufficient advance preparation so … Continued

Surprise, Surprise: SEC Conducting Unannounced Exams

The Boston Regional Office of the SEC has recently conducted roughly 20 unannounced visits to registered investment advisers in the region. This fact, confirmed during the recent meeting of the New England Broker-Dealer and Investment Adviser Association (NEBDIAA), is in keeping with the SEC’s renewed focus on a more robust examination program. While onsite, the … Continued

One Phish, Two Phish, Red Phish, Blue Phish: How to Detect and Mitigate Social Engineering and Ransomware Techniques

Ransomware attacks like WannaCry and NotPetya are increasing in both frequency and damage, routinely making headline news with their abilities to bring down networks of established companies. Yet these cyberattacks typically start by compromising the weakest point in your security chain – people – through simple or complex phishing techniques before spreading to other parts … Continued

DOL Fiduciary Rule Transition Period Extension to 2019 Requested

The Secretary of Labor, Alexander Acosta, made a court filing on August 9 requesting the Transition Period and Delay of Applicability for the Department of Labor Fiduciary Rule be extended from January 1, 2018 to July 1, 2019. This court filing included extending the deadlines for the following Prohibited Contract Exemptions: Best Interest Contract Exemption … Continued

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.