If advisors want to gauge just how much tech advances have disrupted their industry in recent years, a good place to look is FINRA’s latest report on regulatory oversight.
Top of mind for the broker-dealer industry’s self-regulator are cybersecurity, cryptocurrencies, artificial intelligence, and so-called off-channel messages firm representatives send to each other using WhatsApp and similar services. To be sure, the Financial Industry Regulatory Authority is still concerned with more bread-and-butter matters like the Regulation Best Interest conduct standard for brokerages.
But, as the 2024 FINRA Annual Regulatory Oversight Report makes clear, new technologies and related threats are due particular attention. Cybersecurity comes in for particular concern.
Speaking on an episode of FINRA’s Unscripted podcast aired on Tuesday, Omer Meisel, the head of the agency’s national cause and financial crime detection program, said he has seen reports suggesting ransomware attacks have risen by 95% in the past year. Ransomware refers to cyberattacks in which hackers take over a firm’s or person’s computer system and refuse to relinquish control until they’ve been paid a certain amount of money or receive other forms of ransom.
“And the most heavily targeted industry now is the financial sector, having overtaken the health care sector,” Meisel said. “So from my perspective, the cyber threat remains one of if not the top threat to the financial industry.”
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Claire O’Sullivan, the FINRA vice president of regulatory advisor and stakeholder engagement, said the report is not meant to be a list of regulators’ priorities. Rather, the 26 separate topics it discusses are a reflection of what agency officials noticed over the past year to 18 months of conducting compliance exams and similar activities.
For some of the highlights, scroll down: