OCIE issues risk alert re. COVID-19

OCIE issued a risk alert to share observations with broker-dealers and investment advisers (firms) based on OCIE’s ongoing COVID-19 outreach to registrants relating to the following six areas:

    1. (1) protection of investors’ assets – firms should consider additional steps to protect client assets (e.g. with regard to validating disbursements and protecting seniors);
    1. (2) supervision of personnel – firms should consider the impact of personnel working remotely as well as limitations on due diligence of other parties or new personnel;
    1. (3) practices relating to fees, expenses, and financial transactions – firms should consider the increased risk of misconduct due to increased financial pressures on firms and their personnel to compensate for lost revenue;
    1. (4) investment fraud – firms should consider the heightened risk of investment fraud through fraudulent offerings;
    1. (5) business continuity – firms should consider additional steps for protracted remote operations (e.g. security and support for infrastructure and personnel, succession planning); and
    1. (6) the protection of investor and other sensitive information – firms should consider the impact of remote operations on the protection of PII as well as heightened risks related to cybersecurity (e.g. heightened risk of fraudsters engaging in phishing scams).