A left of field post but one of interest on a Sunday, as the SEC charges a U.S investor advisory firm for its breach of fiduciary duty to its€¦

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A left of field post but one of interest on a Sunday, as the SEC charges a U.S investor advisory firm for its breach of fiduciary duty to its investors. Albeit a small fine, but an increasingly important message, when one considers the role of investment advisors. Read this across to advising on client investments and the importance that ESG and cyber plays in corporate governance, and whether investing in companies with a high risk of a material impact to their financial statements due to cyber.

This may have been a tenuous link 12 – 18 months ago, but with the development of cyber regulation, the link is now not so tenuous. As organizations will be expected to manage cyber risk and declare their cyber security risks to regulators. Data that will feed into capital markets and credit rating agencies, and used by corporate investors to price in cyber risk.

Investment advisers have fiduciary duties to act in their clients€„¢ best interest, and this is particularly important when investing clients in complex products such as leveraged ETFs, said Jason J. Burt, Director of the SEC€„¢s Denver Regional Office. Complex products present unique risks, and investment advisers must ensure that there is a reasonable basis to recommend these products before purchasing them for clients

Will capital markets be paying closer attention to cyber risk, several SEC proposals on cybersecurity risk management appear to demonstrate they will.

Ted Dziekanowski

#cyersecurity #cyberriskmanagement #cyberregulation #cyberlaw #capitalmarkets

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