State Registered Investment Advisor

State Registered Investment Advisor.  Recently, the North American Securities Administrators Association, Inc. (“NASAA”) issued a request for public comment regarding a proposed Investment Advisor model rule for information security and privacy.

NASAA is requesting public comment on a proposed state registered investment advisor model rule to address three items:

  1. First, a proposed model rule to require investment advisers to adopt policies and procedures regarding information security (both physical security and cybersecurity) and to deliver its privacy policy annually to clients (“Proposed Information Security and Privacy Rule”).
  2. Second, a proposed amendment to the existing investment adviser NASAA model recordkeeping requirements rule to require that state registered investment advisors maintain these records (“Proposed Recordkeeping Rule Amendment”).
  3. Third, a proposed amendment to the existing investment adviser NASAA model Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers (collectively “UBP Model Rules”) to include failing to establish, maintain, and enforce a required policy or procedure to the enumerated list of unethical business practices/prohibited conduct (“Proposed Unethical Business Practices Rules Amendment”).

While states can independently require investment advisers to adopt information security policies and procedures through existing state statutes or rules, NASAA hopes the Rule Proposal accomplishes the following three objectives:

  • Highlight the importance of data privacy and security in our financial markets along with the need for state registered investment advisors to have information security policies and procedures;
  • Provide a basic structure for how state registered investment advisors may design their information security policies and procedures; and
  • Create uniformity in both state regulation and state registered investment adviser practices.

Comments on the Rule Proposal are due on or before November 26, 2018.  State registered investment advisors needing compliance assistance with their written policy and procedures should contact Registered Advisor Services today!

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