NEWARK – Attorney General Gurbir S. Grewal and the Bureau of Securities, within the Division of Consumer Affairs, today announced that the Bureau’s annual investment adviser examination is underway. The Bureau, which regulates New Jersey’s securities industry, uses the online examination as a risk assessment tool for the nearly 1,000 registered investment adviser firms that manage hundreds of thousands of clients’ investment accounts in the state.
The examination, a critical tool in the Bureau’s proactive investor protection efforts, requires firms to answer questions about their business activities, including portfolio composition, compliance with regulatory requirements, and customer complaints. The questions are updated each year to reflect changes in the investment adviser industry and the Bureau's priorities.
The Bureau amended this year’s examination to assess firms’ protection of customer data and personal information. This effort to enhance cybersecurity in the financial industry is part of a broader effort by the Attorney General and the Division of Consumer Affairs to increase cyber protections for residents in the state.
"The annual examination is an important part of investor protection because it helps the Bureau to identify and address problematic business practices before investors are harmed," said Attorney General Grewal. "The information gleaned from the examination is crucial to the Bureau's comprehensive oversight of the financial services industry and enhances our efforts to protect consumers from data breaches and other cyber risks."
The Bureau analyzes the examination responses to determine whether to conduct a more in-depth examination of a firm and to identify business practices that are of concern. The Bureau also analyzes responses to determine what additional practices should be added to the following years’ examination.
"The Bureau uses the information collected in the annual examination to create risk profiles and, when necessary, enhance oversight to protect investors," said Paul R. Rodríguez, Acting Director of the New Jersey Division of Consumer Affairs. "Investor protection begins with prevention. The exam allows the Bureau to identify trends and practices that expose investors to unnecessary risks in order to take steps to mitigate them.”
The new questions highlight the increasing importance the Bureau places on the responsibility investment advisers have to protect and safeguard their clients’ personal information. The added questions include seeking information regarding the email practices investment advisers utilize when communicating with their clients and others.
“Rising incidents of cyber-breaches, hacking and phishing affect everyone,” said Bureau Chief Christopher W. Gerold. “It is important that investment advisers be aware of this and take appropriate steps to protect their clients’ information and to know how third party vendors and service providers do the same.”
The investment adviser examination can be accessed on the Bureau's website at www.NJSecurities.gov, and must be completed by May 21, 2019.
The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. It is critical that investors "Check Before You Invest." Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contracting the Bureau toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600, or by visiting the Bureau's website. Investors can also contact the Bureau for assistance or to raise issues or complaints about New Jersey-based financial professionals or investments