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:
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- (1) protection of investors’ assets – firms should consider additional steps to protect client assets (e.g. with regard to validating disbursements and protecting seniors);
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- (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;
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- (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;
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- (4) investment fraud – firms should consider the heightened risk of investment fraud through fraudulent offerings;
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- (5) business continuity – firms should consider additional steps for protracted remote operations (e.g. security and support for infrastructure and personnel, succession planning); and
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- (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).