New York partner Stacy Louizos was quoted in a Fund Directions article titled “2019 Outlook: What’s keeping directors up at night?”
The article discusses key areas on which fund directors anticipate spending time over the coming year, including liquidity program preparedness, fee pressure and fintech. While these may not be new topics to directors, the responsibilities around them continue to evolve.
The article reports that the SEC’s remains an important area of attention for directors. Larger mutual fund groups were required to have liquidity programs in place by December 2018 with approval by their boards required by June 2019 (or by December 2019 for smaller fund groups). Louizos noted that many liquidity programs implemented in December 2018 may look different by the time a fund board is technically asked to approve them.
“The final programs the boards are going to approve are going to have some gaps from December that are filled in, because some parts of the rule weren’t required to be in place in December,” she said.
The article also suggests that cybersecurity may be an even higher priority for boards in 2019, noting the SEC’s enforcement action against Voya Financial Advisors last year. This case was the first SEC enforcement action against an investment adviser that charged violations of the Identity Theft Red Flags Rule, which is designed to protect confidential customer information and protect customers from the risk of identity theft.
“One of the takeaways from that discussion was that you can’t just do a cybersecurity program off the shelf,” Louizos said. “It needs to be something that is custom to your business and that is frequently reviewed and updated as business conditions warrant or as circumstances come up.”
The article suggests that although the mutual fund industry has not been hit with a major data breach, the threat of a cyber-breach keeps fund groups on their toes.
“The trick with cybersecurity is that there’s always something new going on,” Louizos added. “There’s always a new threat. The bad guys are always trying to find a way to get around the rules.”
Read Fund Direction’s “2019 Outlook: What’s keeping directors up at night?” (Subscription required)