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Are You Ready for FINRA’s Automated Regulatory Procedures—Or A Surprise Audit?

Why the Right MSP Is Essential for Your Financial Brokerage Firm.

FINRA Technology Services St. Louis-MOIn the world of financial services, risk-taking is part of your DNA. But when it comes to safeguarding your brokerage’s vital data, you should have a zero-tolerance for risk.

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You simply can’t take chances on downtime, compliance issues, and data breaches. That’s why you need a Managed Services Provider (MSP) who specializes in IT financial security.


As you may or may not know, the Financial Industry Regulatory Authority, Inc. (FINRA) regulates brokerage firms and exchange markets. FINRA’s primary goal is to protect investors by maintaining the fairness of U.S. capital markets.

FINRA now uses a technology-driven model called CARDS (the Comprehensive Automated Risk Data System) to compile trading data from approximately 4,000 brokerages that serve over 110 million investor accounts. CARDS automates and standardizes the collection of data that FINRA once accumulated manually. They use big-data analytics to assess, in real time, where fraud occurs, and uses tools to react immediately.

Why You Should Be Concerned.

Critics believe that this automated system has caused a hyper-regulated environment where the smallest discrepancy triggers a FINRA Audit. This is a reality, and all the more reason your organization should always be prepared, and your data protected on multiple levels.

FINRA fines brokerage firms and their representatives for violating rules and regulations. A data breach could result in hefty fines from FINRA.  They require that:

  • All sensitive data be encrypted.
  • Networks are actively managed and monitored to detect and identify intrusions.
  • Firewalls and application services are configured to minimize direct connections to the Internet (including databases).

If You Experience a Data Breach, or Fail a FINRA Audit, You Could Be Hit with Hefty Fines.

The focus of IT for financial brokerages should be compliance with successful audits to mitigate data breaches. Almost every IT decision you make should be based on being audited. Cybersecurity is a HUGE, and a growing focus of FINRA Audits and their decision-making factors.

Last year, FINRA fined several Wells Fargo & Co businesses, RBC Capital Markets, LPL Financial, and others, for a combined $14.4 million.  They found that these financial organizations failed to secure hundreds of millions of electronic documents in a “write once, read many” format, which would have made it impossible to alter or destroy records after they were written.

FINRA said they are concerned about the security of the records because, in recent years, hackers have aggressively targeted financial brokerages’ electronic storage and databases.

They fined Wells Fargo’s securities and their prime brokerage businesses $4 million, and the bank’s brokerage and independent wealth management businesses $1.5 million. FINRA also fined RBS Securities, SunTrust Robinson Humphrey, Georgeson Securities Corp and PNC Capital Markets amounts ranging from $2 million to $500,000.

Even a single lost file, or one hacked email, could result in massive financial and reputational consequences for your brokerage firm. Would you expect that your current clients and partners continue to work with you if they were unsure of the privacy of their financial data? —You can’t afford to risk this.

You Need an MSP Who Understands Security & Compliance for Financial Brokerage Firms.   

SEC Chair, Mary Jo White reported that cybersecurity is the biggest risk to the financial system today—It’s no wonder why—Outdated software and models for security have opened up a never-ending stream of monetary and informational theft.

FINRA recommends that you “establish a cybersecurity program to identify and assess cybersecurity threats, protect assets from cyber intrusions, detect why your systems and assets have been compromised, plan for the response when a compromise occurs, and implement a plan to recover lost, stolen or unavailable assets.” 

Cybercrime has cost brokerage firms like yours millions of dollars. Cases like Wells Fargo, and others that appear in the headlines each week, emphasize the need for:

  • Regular risk and vulnerability assessments to evaluate the effectiveness of your current IT security technology and processes.
  • The need to train your employees, clients, vendors, and others you do business with, to recognize data breach attempts, and how to comply with FINRA’s privacy rules.
  • A comprehensive, multi-layered security solution implemented by MSP financial security experts (like SSE, Inc.) who will analyze your strengths and weaknesses, protect you from modern forms of cybercrime, and provide contingencies for when you are penetrated.

Without the right defenses, cybercriminals can easily infect your IT system with ransomware or other types of malware that compromise data. Many MSPs only use antimalware.  But, the right MSP knows that you need a multi-layered approach to data security. 

  • All of your data must be backed up securely: Storing backups, both on-site and at multiple data centers, protects your firm’s data, and ensures that it’s accessible at all times.
  • On-site encryption is key: With encryption locally, in transit and the cloud, we’ll minimize security risks.
  • Business data must be restored quickly: Your brokerage firm must be available 24/7, and to limit downtime, must be able to restore data quickly after a disaster.
  • A backup and disaster-recovery solution will help you meet compliance regulations: Ensuring that your data is available in an auditable format helps you comply with FINRA regulations.

The good news is—You don’t have to handle this alone.

SSE Inc. Does All This and More. 

As your MSP and Partner in IT, we will: 

  • Help you navigate, resolve and avoid FINRA Compliance issues that plague financial brokerages.
  • Identify and neutralize any vulnerabilities in your security posture by managing security patches, service packs, anti-virus protocols and data backups.
  • Manage your projects, cyber security and compliance to ensure that your systems perform as expected for business and regulatory purposes.

Plus, through our layered approach to security, we will:

  • Manage and monitor desktops, servers and networks to ensure your technology runs at peak performance.
  • Install, manage, and update virus, spam and spyware/malware protection to protect your IT against cyberattacks.
  • Install and manage software updates and patches, to keep your software free of vulnerabilities that can let the criminals in.
  • Back up servers and workstations to ensure your data is secure, both onsite and offsite.
  • Install and manage firewalls to prevent intrusions.
  • Host your email in our data centers to provide 24/7 high-security and reliable data accessibility wherever and whenever you need it.
  • Provide anywhere access to your email, so you stay connected to your clients, prospects and co-workers.
  • Offer Consulting Services from our IT experts who understand the unique needs of your financial services business.
  • Ensure your technology is reliable, secure and boosts your productivity.
  • Designate a Technology Advisor who will make sure your issues and concerns are addressed quickly. No more waiting in queues like with other companies.
  • Help you achieve the ROI you expect from your technology by providing expert consulting on how your staff can make better use of it.
  • Give you the tools to develop unbeatable documentation processes throughout your firm’s operations.

Don’t get caught short—Don’t get fined. Ensure you’ll pass a surprise FINRA Audit. Choose the right MSP.  Select SSE Inc. Contact us at: (314) 439-4700 or info@sseinc.com to get started.

Written by SSE Networks on April 25th, 2017.

  • 1835 Lackland Hill Parkway,
    St. Louis, MO 63146

  • (314) 439 - _ 4700

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