The North American Securities Administrators Association ("NASAA") proposed model investment adviser rules to address information security and privacy issues.

The proposal consists of three components:

  1. A new model rule that would obligate an investment adviser to adopt policies regarding information security (physical security and cybersecurity) and to provide a privacy policy annually to clients ("proposed information security and privacy rule");
  2. A requirement that an investment adviser maintain records relating to the proposed information security and privacy rule; and
  3. A provision that it would be an unethical practice for an investment adviser to "fail . . . to establish, maintain, and enforce a required policy or procedure." (Note that this provision is not limited to privacy procedures, but would pertain to any policy that the adviser is required to maintain.)

Comments on the proposal are due on or before November 26, 2018.

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