New Jersey securities regulators to focus on AI, cybersecurity in annual adviser examinations
TRENTON, N.J. — The New Jersey Bureau of Securities has begun its annual examination of investment adviser firms, with regulators placing increased emphasis this year on cybersecurity practices and the growing use of artificial intelligence in the financial services industry.
Attorney General Jennifer Davenport and the Bureau of Securities, which operates within the Division of Consumer Affairs, announced Monday that the 2026 examination is underway.
The Bureau uses the annual examination as a risk assessment tool for nearly 800 New Jersey-registered investment adviser firms that manage investment accounts for state residents. The review examines firm organization, business practices, investment concentration and information about representatives associated with each firm.
“New Jersey families work hard to make ends meet and build financial security, and protecting their investments is more important than ever,” Davenport said. “The annual investment adviser examination protects consumers by ensuring that firms managing New Jersey residents’ money are operating responsibly and safeguarding client information. As cybersecurity threats proliferate and the use of artificial intelligence increases, the focus of this year’s examination reflects our continued commitment to protecting the hard-earned money of New Jerseyans from risks both old and new.”
According to state officials, the examination will take a closer look at how firms use artificial intelligence in developing investment portfolios and recommendations, whether AI is being used for research and data collection, how firms market AI-related services and how those practices are disclosed to clients.
Regulators also are seeking additional information about cybersecurity measures, including whether firms maintain written policies and procedures, provide employee training and conduct due diligence on third-party vendors and their cybersecurity practices.
“The annual examination process is a cornerstone of New Jersey’s robust investor protection,” said Jeremy E. Hollander, acting director of the Division of Consumer Affairs. “The information gleaned from this examination enables our Bureau of Securities to identify emerging risks and address potentially disruptive industry practices before they can harm investors.”
The examination also includes questions regarding portfolio composition, regulatory compliance, customer complaints, privacy protections and safeguards for vulnerable adults.
“Artificial intelligence and other emerging technologies may create new opportunities in the investment marketplace, but they also present new risks that demand careful oversight,” said Bureau Chief Keith A. Alt. “By examining how firms use and market AI, as well as the steps they take to safeguard client data and manage cybersecurity threats, we can better identify emerging issues and promote transparency across the securities industry. Strong compliance practices not only protect investors, but they also help strengthen confidence in New Jersey’s financial services sector and support a fair, innovative, and resilient marketplace for firms and clients alike.”
Registered investment adviser firms must complete the electronic examination by June 30. State officials said firms that fail to comply could face administrative action for failing to cooperate with the Bureau.
