| June 30
June 30 The U.S. Securities and Exchange
Commission's new investor advocate's office will study efforts
by the agency and other market participants to protect investors
from cyber security threats, it said in a report issued on
The Office of the Investor Advocate will review initiatives
by the Financial Industry Regulatory Authority, stock exchanges
and alternative trading systems, the office said. It will also
look at the potential impact of a proposed SEC rule that would
require new technology standards and compliance rules for market
"As markets and financial services have become increasingly
automated, investor protections have not kept pace with
technological evolution," the office said in the report, titled
"Report on Objectives" for fiscal year 2015."
It was the first-ever report by the Investor Advocate. The
2010 Dodd-Frank financial reform law mandated formation of the
office at a time when the SEC was under attack for numerous
failures. Among them was its failure, despite numerous red
flags, to detect Bernard Madoff's multibillion-dollar Ponzi
scheme before it unraveled in late 2008 during the credit
Nearly four years would pass, however, before the office
would open for business. In February, the SEC named securities
lawyer Rick Fleming as its first investor advocate. Fleming was
previously deputy general counsel for the North American
Securities Administrators Association, an organization of state
securities regulators, and deputy general counsel for the Office
of the Kansas Securities Commissioner.
Fleming reports directly to the agency's highest official,
Chair Mary Jo White.
Dodd-Frank requires Fleming's office to file two reports
with Congress each year.
The investor advocate's plan to study cyber security
measures comes at a time when Wall Street and regulators are
nervous about cyber threats and other technology-related
disruptions. They have included "technological 'glitches' and
other anomalies with investors subjected to large price swings
without economic justification," according to the report.
In February, FINRA said it would look at the measures
brokerages are taking to protect their businesses and customers
from cyber security threats.
That followed cyber attacks affecting millions of customers
of well-known retailers such as Target Corp and Neiman
The study by the investor advocate's office will take place
during the SEC's fiscal 2015 year, beginning in October,
according to the report.
Other issues the office will study include the fairness of
markets to investors and "whether individual investors are
abandoning the equity market because they are wary of it,"
according to the report.
(Reporting by Suzanne Barlyn; Editing by Steve Orlofsky)