The New Jersey Bureau of Securities announced its 2026 annual investment adviser examination, with a particular focus on firms' use of artificial intelligence and cybersecurity protocols. The examination requires nearly 800 registered investment adviser firms to answer questions about AI use in portfolio management, data protection policies, and third-party vendor due diligence. Failure to comply may result in administrative action.
Firms must complete the electronic examination by June 30, 2026, providing detailed responses about AI use, cybersecurity policies, employee training, and third-party vendor due diligence. Non-compliance may lead to administrative action.
In-house legal teams should review vendor agreements with third-party service providers, particularly those handling client data or providing AI tools. Key clauses to examine include data protection and cybersecurity requirements, vendor due diligence obligations, and provisions for periodic security audits. Additionally, customer agreements should be reviewed for disclosures about AI use in investment recommendations and data handling practices. Employee contracts and training policies should also be updated to reflect new cybersecurity and AI compliance requirements.
Entity
New Jersey Bureau of Securities
Industry
Financial ServicesOfficial Press Release
https://www.njoag.gov/new-jersey-bureau-of-securities-annual-examination-of-investment-advisers-will-look-closely-at-ai-and-cybersecurity/
Investment Adviser Written Examination.aspx
https://www.njconsumeraffairs.gov/bos/Pages/Investment-Adviser-Written-Examination.aspx
New Jersey Attorney General Enforcement Page
https://www.njoag.gov/about/divisions-and-offices/division-of-consumer-affairs/
"New Jersey Bureau of Securities"
"N.J.A.C. 13:47A-14.16"
"the examination takes a close look at the use of Artificial Intelligence (AI) in the construction of investment portfolios or recommendations to clients"
"The examination also focuses on online data protection, seeking to determine whether firms have written policies and procedures on cybersecurity"
"Each registered investment adviser is required to complete the examination in the electronic format provided no later than June 30, 2026"
$18.0M
Attorney General Jennifer Davenport joined a bipartisan coalition of 42 attorneys general in announcing a settlement with the bankruptcy trustee for 23andMe, resolving allegations from a 2023 data breach that compromised genetic data of 6.9 million people worldwide, including nearly 150,000 in New Jersey. The settlement provides $18 million to states from available bankruptcy funds, plus enhanced data security and consumer deletion rights for the successor entity, 23andMe Research Institute.
$45.0M
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