SEC alerts advisers on WannaCry ransomware cyberattacks

The Securities and Exchange Commission staff issued a cybersecurity alert to broker-dealers, advisers and investment funds Wednesday in the wake of the pervasive ransomware cyberattack over the past five days known as "WannaCry." The alert from the Office of Compliance Inspections and Examinations emphasized the importance of firms conducting penetration tests and vulnerability scans on critical systems and stressed the necessity of upgrading systems on a timely basis. The ransomware attack that was unleashed last week was especially damaging because it had a mechanism to spread through networks, looking to infect other computers that hadn't been updated to stop the worm. The regulator said it doesn't expect firms to anticipate and prevent every cyberstrike, but it highlighted the importance of thinking about these issues in advance of an incident. (More: Cyberattack should prompt advisers to ask their IT professionals hard questions) "Appropriate planning to address cybersecurity issues, including developing a rapid response capability, is important and may assist firms in mitigating the impact of any such attacks and any related effects on investors and clients," the alert said. WannaCry infects computers with malicious software that encrypts users' files and demands payment to regain access to the data. The ransomware attack hit more than 200,000 computers in 150 countries in recent days. (More: Online security ETFs surge in face of cyberattacks) The SEC staff alert said a recent OCIE examination of 75 firms found that 5% of broker-dealers and 26% of advisers and investment funds did not conduct periodic risk assessments of critical systems to uncover vulnerabilities, potential business consequences and other cybersecurity threats. The alert also recommended firms review the U.S. Department of Homeland Security's Computer Emergency Readiness Team's warning about cybersecurity actions firms might want to consider in reaction to the latest ransomware incident.