The SEC’s cybersecurity rules represent the most significant regulatory shift in information security requirements for financial firms in over a decade. If your firm is registered with the SEC — as an investment adviser, broker-dealer, or fund manager — these rules directly affect how you manage, document, and report on your cybersecurity program. One82 is a managed service provider based in Los Gatos, California, specializing in IT, cybersecurity, compliance, and AI for professional services firms in the San Francisco Bay Area. We work with boutique financial services firms across the region to build cybersecurity programs that meet SEC requirements and withstand examination scrutiny.

This guide explains what the SEC cybersecurity rules require, who they apply to, and the specific steps your firm needs to take.

Overview of the SEC Cybersecurity Framework

The SEC has issued several cybersecurity-related rules and guidance documents that collectively create a comprehensive framework for registered entities:

For public companies (July 2023 rule): The SEC adopted rules requiring public companies to disclose material cybersecurity incidents within four business days on Form 8-K and to describe their cybersecurity risk management, strategy, and governance annually on Form 10-K (SEC Release No. 33-11216).

For investment advisers and funds (proposed and adopted rules): The SEC has proposed and adopted rules requiring registered investment advisers (RIAs), broker-dealers, and investment companies to implement written cybersecurity policies, conduct annual risk assessments, report significant incidents, and maintain examination-ready documentation.

For all registrants: The SEC’s Division of Examinations has made cybersecurity a perennial examination priority. In its 2024 Examination Priorities report, the SEC named information security and operational resiliency as top focus areas for investment adviser and broker-dealer examinations (SEC Division of Examinations, 2024 Priorities).

Who Do the SEC Cybersecurity Rules Apply To?

The SEC’s cybersecurity requirements apply to:

  • Registered Investment Advisers (RIAs) — Including boutique advisory firms, family offices with SEC registration, and multi-strategy fund managers
  • Broker-Dealers — Including placement agents and boutique capital markets firms registered with FINRA
  • Investment Companies — Including registered funds and their advisers
  • Public Companies — Any firm with SEC reporting obligations

For boutique financial firms in the San Francisco Bay Area, this most commonly affects:

  • Private equity and venture capital firms registered as investment advisers
  • Boutique investment banks with broker-dealer registration
  • Hedge fund managers and multi-family offices with SEC filings
  • Valuation firms serving SEC-registered entities

Even firms not directly registered with the SEC may face cybersecurity requirements through their relationships with registered entities. Institutional LPs, fund administrators, and counterparties increasingly require cybersecurity documentation as part of due diligence questionnaires (DDQs).

Specific Requirements Your Firm Must Address

1. Written Cybersecurity Policies and Procedures

Your firm must adopt and implement written policies and procedures that address:

  • Classification and protection of sensitive data (investor PII, deal documents, financial models)
  • Access controls and user authentication
  • Risk assessment methodology and frequency
  • Threat monitoring and detection
  • Incident response and recovery
  • Vendor and third-party risk management
  • Data retention and disposal

These policies must be reasonably designed based on your firm’s size, complexity, and the nature of the data you handle.

2. Annual Cybersecurity Risk Assessment

The SEC expects registered entities to conduct a formal risk assessment at least annually that:

  • Identifies cybersecurity threats and vulnerabilities specific to your firm’s operations
  • Evaluates the effectiveness of existing controls
  • Prioritizes remediation of identified gaps
  • Documents findings in a format suitable for examination review

According to the SEC’s Office of Compliance Inspections and Examinations (OCIE), cybersecurity risk assessments were the single most requested document category during 2023 investment adviser examinations (SEC OCIE Risk Alert, 2023).

3. Incident Reporting

Registered investment advisers and funds are required to:

  • Report significant cybersecurity incidents to the SEC within 48 hours (under the adopted rule for advisers and funds)
  • Maintain detailed records of all cybersecurity incidents, including minor ones
  • Notify affected investors when their personal information has been compromised
  • Preserve incident-related records for at least five years

For public companies, material incidents must be disclosed on Form 8-K within four business days of determining materiality.

4. Examination-Ready Documentation

SEC examiners expect to review, at minimum:

  • Your written cybersecurity policies and procedures
  • Your most recent risk assessment
  • Evidence of implementation (logs, configuration records, training records)
  • Incident response logs and post-incident analyses
  • Vendor risk assessments for third-party service providers
  • Board or senior management reporting on cybersecurity matters

Firms that cannot produce this documentation during an examination face deficiency findings that can escalate to enforcement actions.

5. Governance and Oversight

The SEC expects senior management or a designated individual to be responsible for:

  • Overseeing the firm’s cybersecurity program
  • Reviewing and approving cybersecurity policies
  • Receiving regular reports on cybersecurity risks and incidents
  • Ensuring adequate resources are allocated to cybersecurity

For boutique firms without a dedicated CISO, this responsibility often falls to the COO, Chief Compliance Officer, or Managing Director.

How One82 Helps Financial Firms Meet SEC Requirements

Boutique financial firms typically have 5 to 75 employees and do not maintain in-house cybersecurity teams. Meeting SEC cybersecurity requirements requires specialized expertise that most small firms lack internally. One82 addresses each requirement through our managed services:

Written policies and procedures. We develop cybersecurity policy documentation tailored to your firm’s size, registration status, and data handling practices — written to withstand SEC examination review.

Annual risk assessments. One82 conducts formal cybersecurity risk assessments annually, producing documented findings and remediation plans that satisfy SEC expectations.

Continuous monitoring and detection. Our managed security stack — including EDR, MFA enforcement, email security, and dark web monitoring — provides the ongoing threat detection and response capability the SEC expects.

Incident response. We maintain and execute incident response procedures, including the 48-hour notification timeline, evidence preservation, and investor communication support.

Examination preparation. When your firm receives an SEC examination notice, One82 helps compile and organize all required cybersecurity documentation so you are ready from day one.

DDQ support. For firms fielding due diligence questionnaires from institutional LPs and investors, we provide the cybersecurity documentation and evidence needed to satisfy the 10 to 20 IT security questions that now appear in most DDQs.

Frequently Asked Questions

Does the SEC cybersecurity rule apply to small investment advisory firms?

Yes. The SEC’s cybersecurity requirements apply to all registered investment advisers regardless of firm size or assets under management. Boutique firms with $100 million in AUM face the same fundamental requirements as large asset managers, though the SEC applies a proportionality standard — expecting controls to be reasonable relative to the firm’s size and complexity.

What happens if my firm is not compliant when the SEC examines us?

Non-compliance can result in deficiency letters, required corrective actions, and in serious cases, enforcement proceedings including fines. The SEC has brought enforcement actions against firms that failed to implement reasonable cybersecurity policies, with penalties ranging from censures to six-figure fines. Beyond regulatory consequences, non-compliance creates legal liability if a breach exposes investor data.

How does this relate to SOC 2 compliance?

SOC 2 and the SEC cybersecurity rules address overlapping concerns but serve different purposes. SOC 2 is a third-party audit framework that demonstrates your security controls to clients and partners. The SEC rules are regulatory requirements enforced by a federal agency. Many boutique financial firms pursue both — SOC 2 to satisfy LP and counterparty due diligence, and SEC compliance to satisfy their regulatory obligations. The controls required are largely complementary.

Do we need a dedicated CISO to comply?

No. The SEC requires that someone at the firm be designated as responsible for cybersecurity oversight, but that person does not need to hold a CISO title. Many boutique firms assign this responsibility to the COO or Chief Compliance Officer and partner with a managed IT provider like One82 to supply the technical expertise and day-to-day security operations.

What documentation should we have ready for an SEC cybersecurity examination?

At minimum: your written cybersecurity policies and procedures, your most recent risk assessment, evidence that controls are implemented (system logs, configuration records, MFA enrollment records, training completion records), incident response logs, vendor risk assessments, and evidence of board or senior management oversight. Your MSP should be able to produce the technical evidence on demand.