SEC Shifts Cyber Enforcement Priorities

The SEC has recently replaced its Crypto Assets and Cyber Unit with the newly formed Cyber and Emerging Technologies Unit (CETU).  This reorganization is in alignment with the SEC’s shift towards prioritizing enforcement actions involving fraud and misconduct relating to emerging technologies, particularly to the extent that they impact retail investors.  CETU is comprised of approximately 30 fraud specialists and attorneys across multiple SEC offices and has a mandate that includes addressing AI and machine learning fraud, misuse of social media for fraudulent purposes, hacking, and takeover of retail brokerage accounts.  CETU is also tasked with prioritizing the compliance of regulated entities with applicable cybersecurity regulations.  Registered fund directors should continue to diligently monitor fund cybersecurity and compliance policies and review risks and disclosures relating to cybersecurity and the use of AI and other emerging technologies.

Click here to access the SEC Press Release regarding the formation of its Cyber and Emerging Technologies Unit.