Claire McHenry Deputy Director Securities Bureau

Transcription

1 Claire McHenry Deputy Director Securities Bureau

2 DISCLAIMER This presentation is being made by the Deputy Director Securities Bureau of the Nebraska Department of Banking and Finance on behalf of the Department. It does not constitute legal interpretation, guidance or advice of the Department.

3 Bureau of Securities Securities Registrations and Exemptions Licensing of Firms and Individuals Examinations Investigations Enforcement Actions/Orders Outreach and Education

4 Securities Registrations 40,000 35,000 33,407 30,000 25,000 28,523 23,250 28,965 25,179 27,691 29,836 20,000 15,000 10,000 5,000 0 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Securities Registrations

5 Licensing of Firms 1,600 Broker-Dealer and Federal Covered Advisers 1,400 1,200 1, ,425 1,416 1,320 1,289 1,139 1,086 1,093 1,044 1,360 1,373 1,364 1,319 1,273 1,184 0 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 BDs Federal IAs

6 Licensing of Firms State Registered Investment Advisers FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 State IAs

7 Licensing of Broker-Dealer Agents 120, ,000 80,000 74,970 84,179 86,447 87,600 93,483 98, ,745 60,000 40,000 20,000 0 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 BD Agents

8 Licensing of Investment Adviser Representatives 4,500 4,000 3,500 3,000 3,272 3,419 3,410 3,494 3,825 3,921 4,035 2,500 2,000 1,500 1, FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 IARs

9 Examinations Who we may examine State-licensed investment advisers home and branch offices Broker-dealer home and branch offices Types of exams Cycle (Every 3 years) Focused Sweep For cause

10 Examination Process Schedule Notice and request for books and records On-site Analysis Findings Response Review Closing or enforcement referral

11 Common Findings Incorrect, incomplete, or inconsistent filings Lack of client suitability information Financial statements not calculated according to GAAP Insufficient contracts, hedge clauses Custody requirements with direct deduction of fees Insufficient supervision False or misleading advertisements

12 Third party robo-advisers Cloud storage of documents Electronic signatures Exam Trends

13 Post-Exam Surveys In 2016 began soliciting feedback from firms after an examination Responses are anonymous and go directly to the Director According to you, we re doing a good job! The examination findings will assist you in enhancing your safety and soundness practices. The examination was conducted in a fair and objective manner.

14 Investigations Cases come from a variety of areas Direct complaint from investors Other State Agency referrals Nebraska Attorney General s Office Nebraska Department of Insurance Other State Securities Regulators U.S. Securities & Exchange Commission; or Industry group that polices its own members.

15 Investigations Common Cases Registered Securities Suitability Advertising Unregistered Securities Promissory Notes Oil and Gas Offerings Ponzi Schemes Affinity Fraud

16 Rulemaking New rules effective May 11, 2016 Crowdfunding (48 NAC 38, 48 NAC 39, and 48 NAC 40) Integration of Offerings (48 NAC 41) Exempt Reporting Advisers (48 NAC 42)

17 Rulemaking Proposed amendments to Securities Act of Nebraska Comprehensive review Affects 33 of the 42 rules Technical and substantive Public hearing on August 10, 2016 Proposed amendments to 48 NAC 7 for Investment Advisers Business Continuity and Succession Planning Custody Written policies and procedures

18 Elder Financial Abuse Senior Financial Forums Senior$afe

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21 2016 Cybersecurity Survey What are the password requirements? Are files containing sensitive data encrypted? Other 62% 4% 14% 20% Minimum of 8 numbers/letters combo Minimum of 8 numbers/letters/ symbols combo and Case Sensitive 30% 1% 69% Yes No N/A None

22 2016 Cybersecurity Survey Does your firm use antivirus/anti-malware software? How often is the software updated? Upon Release Daily/Continuous 5% 6% 7% 7% 6% 24% Automatically Annually As Needed 95% Yes No 8% 8% 14% 20% Monthly Weekly/Every 5 days Unknown/ NA Other

23 2016 Cybersecurity Survey Does your firm have policies and procedures in place regarding cybersecurity? 21% Back up and disaster recovery. Secure disposal of computers/devices or data storage devices including copiers and printers. The continued operation during a cybersecurity event and/or disaster (manmade or natural). The loss, theft, or compromise of computers/devices or data storage devices and related data. 97% 74% 72% 82% 79% Yes No How the firm handles attempts to access data by unauthorized individual(s). How the firm monitors the network for cyber-attacks. 61% 61% 0% 20% 40% 60% 80% 100% 120%

24 Best Practices Use strong passwords Encrypt sensitive data Control who has access to sensitive data Have written policies and procedures To prevent data breaches Create a data breach response plan Use and regularly update anti-virus and anti-malware programs Educate and train your users

25 Questions? (402) K Street Suite 300 Lincoln, NE 38508