New York state’s Department of Financial Services (NYDFS) has proposed updates to regulations in the oversight of cybersecurity risks. The proposal would require board approval of cyber policies at banks, insurers, and other financial institutions that meet a certain size threshold laid out by the regulator. Companies would also have to disclose whether their directors have the expertise to oversee security risks or if they rely on outside cyber consultants. The proposal updates New York’s first-of-its-kind cybersecurity rules for financial institutions. Companies that run afoul of the new rules would risk NYDFS fines. The proposal follows similar federal proposals in which the SEC had highlighted board cyber expertise in proposed breach-reporting rules. Both the SEC and NYDFS proposals highlight the fact that increased threats from ransomware are too broad for security experts to oversee on their own. The updated regulations are expected to increase pressure on companies to quickly gauge the business impacts of such events. 

Finsum: Following in the SEC’s footsteps, the NYDFS has proposed an update to cybersecurity regulations that would require board approval of cyber policies at financial institutions.

Western International Securities Inc., which is the first broker-dealer to be sued by the SEC for alleged violations of its Regulation Best-Interest fiduciary rule, is expected to spend at least $1 million on its defense. The broker-dealer is accused of failing to meet its fiduciary obligations by selling $13.3 million in high-risk, unrated junk bonds that were not in the best interest of retirees and other risk-averse retail customers. Western said it plans to “actively defend” itself against the SEC’s allegations. Brian Rubin, a partner at Eversheds Sutherland LLP, estimated that Western’s legal fees will cost anywhere from several hundred thousand dollars to well over $1 million. He believes that it’s likely that the SEC demanded too much to settle due to it being its first Reg BI enforcement case. Since the conduct took place after the effective date of Reg BI in June 2020, the SEC brought the charges under Reg BI as opposed to its predecessor suitability standard. 

Finsum: Western International Securities is expected to spend at least $1 million on attorney fees as it fights the first Reg BI lawsuit.

The rumble for a trend called direct indexing seems to be accelerating, as a burgeoning number of investors are displaying a demand for specialized portfolios, according to markettradingessentials.com. The upshot: eschewing ownership of a mutual or exchange traded fund, direct indexing’s flashing the wallet on stocks of an index, the site continued. The idea’s to hit to hit paydirt on, for example, tax efficiency, diversification or values-based investing.

“It says a lot that these large fund providers are leaning into direct indexing,” said Adam Grealish, head of investments at Altruist, an advisor platform with a direct indexing product. So, in light of the ascension of direct indexing, investors might be asking, pre tell, how to build a portfolio in which this strategy’s incorporated, according to corporate.vanguard.com. Well, presto, investors can cull ways to meet that goal through a framework available in Personalized indexing: A portfolio construction plan, a Vanguard research paper recently published.

“Our research represents a sensible starting point for potential direct indexing investors who want to include this strategy in their portfolios,” said Vanguard senior investment strategist Kevin Khang, Ph.D., one of the paper’s authors.