Regulation S-P: The SEC’s Latest Cybersecurity Mandate – What RIAs Need to Know
The SEC’s latest amendments to Regulation S-P mark a major shift in how Registered Investment Advisers (RIAs) must safeguard client information. With cyber threats on the rise and investor trust on the line, these changes demand immediate attention. If your firm hasn’t yet developed a robust incident response plan, now is the time to act.
What’s New?
Originally adopted in 2000, Regulation S-P governs how financial firms protect consumer data. However, with the rapid evolution of technology and cyber risks, the rule needed a significant update. The new amendments introduce stronger cybersecurity requirements, expanding the rule’s protections and imposing stricter compliance obligations on financial institutions, including RIAs.
The three major changes every RIA should be aware of:
Mandatory Written Cybersecurity Policies – RIAs must establish, implement, and maintain written policies that address cybersecurity risks, unauthorized access to client information, and data disposal procedures.
Customer Notification Requirement – If sensitive client information is breached or reasonably likely to have been accessed, firms must notify affected individuals within 30 days.
Expanded Coverage – The regulation now explicitly applies to transfer agents and funding portals, ensuring that more financial entities follow the same security protocols.
FREQUENTLY ASKED QUESTIONS ABOUT REG S-P
Q1: What are the 2024 Regulation S P cybersecurity requirements for RIAs?
In May 2024, the SEC added new cybersecurity mandates to Regulation S‑P. RIAs must now maintain:
- Written cybersecurity and incident response policies
- Client breach notification procedures within 30 days
- Vendor oversight with 72-hour breach notification
- Secure data disposal and privacy safeguards
- Expanded recordkeeping on policies, incidents, notifications, and vendor audits
Q2: Who must comply with Regulation S P and when do the rules take effect?
- Large RIAs (≥ $1.5 billion AUM): December 3, 2025
- Smaller RIAs (< $1.5 billion AUM): June 3, 2026
All SEC-registered RIAs fall under the updated cybersecurity mandate.
Q3: What must be included in my written cybersecurity policies under Reg S P?
Policies must address:
- Risk assessments and continuous monitoring
- Data protection and secure data disposal methods
- Incident detection, containment, recovery, and logging
- Vendor risk management and breach notification procedures
Q4: When does a security incident require client notification?
A breach triggers notification when unauthorized access occurs—or is reasonably suspected—of sensitive customer information. Notifications must be issued within 30 days of discovery.
Q5: What qualifies as “sensitive customer information” under Reg S P
This includes data that poses risk of harm, such as:
- Social Security numbers or government IDs
- Account credentials or financial account info
- Biometric data or unique identifiers
Q6: How must RIAs manage vendor cybersecurity under Regulation S P?
RIAs must:
- Perform vendor due diligence before engagement
- Monitor vendor security practices continuously
- Require 72-hour breach notification from vendors into contracts
Q7: What recordkeeping do RIAs need to comply with Reg S P?
Maintain documentation for 3–6 years, including:
- Security policies and internal procedures
- Incident and breach logs
- Client notification records
- Vendor oversight documentation and contracts
Q8: What are the key steps RIAs should take right now?
- Audit and update privacy and cybersecurity policies
- Draft or enhance incident response plans
- Implement notification templates and workflows
- Establish a vendor breach program
- Conduct tabletop exercises and staff training
- Document thoroughly for audit readiness
How Does This Differ from the SEC’s Cybersecurity Rule?
It’s important to distinguish Regulation S-P from the broader SEC Cybersecurity Rule. While the Cybersecurity Rule focuses on fiduciary responsibility and operational resiliency, Regulation S-P is primarily concerned with protecting client information and ensuring notification in case of a breach. In essence:
- The Cybersecurity Rule ensures that your firm can continue operations despite a cyberattack.
- Regulation S-P ensures that your firm safeguards and notifies clients when their data is compromised.
Both rules work together to create a comprehensive cybersecurity framework that RIAs must adopt.
Compliance Deadlines – When Does This Take Effect?
The SEC is giving RIAs a tiered timeline for compliance:
- Larger RIAs (AUM ≥ $1.5 billion): Deadline – December 3, 2025
- Smaller RIAs (AUM < $1.5 billion): Deadline – June 3, 2026
While these dates may seem far off, waiting until the last minute to comply could put your firm at significant risk. The best approach is to start implementing these policies now.
How Will This Impact Your Firm?
If your firm already has a strong cybersecurity framework, compliance will be relatively straightforward. However, if your cybersecurity measures are lacking, expect a substantial lift to meet the new standards.
The most challenging aspect for many RIAs will be the customer notification requirement. Unlike other SEC regulations, this amendment does not require reporting breaches to regulators, but it does mandate timely and transparent communication with affected clients. This aligns with evolving state-level data breach laws, but it also means that RIAs must have clear incident response protocols in place.
What You Need to Do Now
- Assess Your Cybersecurity Framework – Does your firm already have written policies that comply with Regulation S-P? If not, it’s time to draft them.
- Develop a Customer Notification Process – Ensure that if a breach occurs, you have a clear, SEC-compliant communication plan ready to deploy.
- Strengthen Vendor Oversight – Regulation S-P requires service providers to also adhere to strict security standards. Your contracts should include explicit cybersecurity clauses.
- Implement a Data Disposal Policy – The amendments broaden the scope of information that must be securely destroyed. Make sure your firm’s data retention and disposal practices align with the new rules.
Next Steps – Don’t Wait Until the Deadline
Cyber threats aren’t waiting until 2025 or 2026, and neither should you. RIAs that proactively implement these changes will not only comply with SEC rules but will also build stronger, more resilient businesses.
🔹 Need help ensuring compliance? Download our Regulation S-P Compliance Guide or book a free consultation with our cybersecurity experts today.
Your clients trust you to protect their financial futures—make sure their data is just as secure.
👇🏻 Fill out the form to download the guide!
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Head Investment Parnters
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Principal Slate, Disharoon, Parish & Associates
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