Watchdog reviews Wall St. firms' efforts to curb cyber attacks

Reuters News
Posted: Feb 07, 2014 12:06 PM

By Suzanne Barlyn

(Reuters) - Wall Street's Financial Industry Regulatory Authority is looking at the measures that brokerages are taking to protect their businesses and customers against cyber security threats, the industry-funded regulator said.

FINRA, which conducts periodic "sweeps," or targeted checks on Wall Street brokerages, is conducting the review, in part, because of the growing threat to information technology systems from "a variety of sources," it wrote in a letter on its website late Monday.

Those threats also pose a risk to the U.S. financial system, FINRA wrote.

Cyber attacks have hit millions of customers of well-known retailers including Target Corp and Neiman Marcus. Last week, Target revealed that the theft of credentials from an undisclosed vendor helped the attackers gain access to about 40 million credit and debit card records and another 70 million customer accounts.

U.S. Securities and Exchange Commission officials said on January 30 that the agency plans to scrutinize whether asset managers have policies in place to prevent and detect cyber attacks and are properly safeguarding against security risks posed by vendors having access to their systems.

FINRA's letter included requests for information about their plans to keep business running in case of a cyber-attack, insurance coverage for problems related to cyber security, and details about the impact of cyber-attacks on the firms during the past year. The regulator also wants details about firms' relationships with outside vendors.

FINRA plans to report back to the industry about its findings.

It is unclear how many firms FINRA will review during the process. A spokeswoman was not immediately able to comment.

(Additional reporting by Sarah N. Lynch; Editing by David Gregorio)