Hedge funds and asset management
Penetration Testing for Hedge Funds and Asset Managers
Hedge funds and asset managers run on a small staff, a large cloud footprint, and information that moves markets. Invadel tests trading infrastructure, investor portals, and the people who run them at a fixed price, with evidence written for SEC examiners and allocator operational due diligence.
The stakes
Why hedge funds get tested differently
Attackers want two things from a fund: the money and the edge. Wire fraud through a compromised operations mailbox is the most direct route to the first. Positions, research, and trading signals are the second. They are reachable through an over-shared cloud drive, a research analyst’s phished credentials, or a prime broker portal session without phishing-resistant MFA. Small teams with broad administrative rights make both easier.
Registered investment advisers and broker-dealers face SEC and FINRA expectations for cybersecurity programs, and examiners ask how controls are tested. Allocators run operational due diligence before every commitment and increasingly want an independent penetration test in the file. Funds regulated by the Department of Financial Services owe annual testing under 23 NYCRR 500. SEC-registered advisers also answer to Regulation S-P, amended in 2024 to require a written incident response program and notice to affected customers within 30 days.
A generic perimeter test tells a fund what it already knows: there is not much perimeter. The real exposure is identity and cloud. The Microsoft 365 or Google Workspace tenant, and the SSO provider in front of the order management system. The AWS account running research pipelines, and the handful of people whose approval moves money. Testing has to start from a phished user and follow the access, not scan the firewall and stop.
What we test
The systems attackers go after first
Identity and email tenant
Microsoft 365 or Google Workspace, tested for phishing resistance, MFA bypass, mailbox rule abuse, and conditional access gaps that let a stolen session reach the operations inbox.
Trading and order management systems
Order management, portfolio, and execution platforms and the SSO in front of them, tested for authentication weaknesses, session handling, and access beyond a user’s desk.
Research and data infrastructure
Cloud environments running research pipelines, market data, and proprietary models, tested for IAM escalation, exposed storage buckets, and secrets in notebooks and repositories.
Investor portals and reporting
Web portals where limited partners view statements and documents, tested for authorization flaws between investors, weak onboarding flows, and exposure of capital account data.
Operations and payment workflows
The people and approvals behind wires, subscriptions, and redemptions, tested with targeted phishing and voice pretexting built around real fund events such as a capital call.
Vendor and counterparty access
Fund administrator, prime broker, and outsourced IT connections, reviewed for shared credentials, standing remote access, and trust placed in third-party portals and file transfers.
Compliance
The frameworks that usually apply
- SEC Regulation S-P
The 2024 amendments add a written incident response program, customer notice within 30 days, and service provider oversight. Larger firms had to comply by December 3, 2025, smaller firms by June 3, 2026.
- NYDFS 23 NYCRR 500
Annual internal and external testing for managers and affiliates operating under a Department of Financial Services license or registration.
- SOC 2
The report allocators and fund administrators increasingly ask managers for, with the penetration test as core Security criteria evidence.
- ISO 27001
For managers certifying their ISMS to satisfy institutional investors, with testing mapped to Annex A 8.8 and timed around the audit.
Services
What funds and asset managers usually buy
- From $3,600
Phishing Simulation & Social Engineering Testing
Phishing and social engineering campaigns that measure real-world human risk, with click and credential metrics by department, from $3,600.
- From $6,800
Cloud Penetration Testing
Configuration and exploitation testing across AWS, Azure, and GCP: identity, storage, network paths, workloads, and Kubernetes, from $6,800.
- From $4,200
External Network Penetration Testing
Testing of your internet-facing perimeter, from exposed services and VPN gateways to mail and cloud edges, with a free retest, from $4,200.
- From $6,000
Internal Network Penetration Testing
Testing from an assumed foothold inside your network: Active Directory attack paths, lateral movement, and segmentation, from $6,000.
- From $12,500
Red Teaming Services
Objective-based attacks that prove the whole chain and test if your team detects and stops them, mapped to MITRE ATT&CK, from $12,500.
Due diligence
Cybersecurity due diligence: what allocators ask for
The cybersecurity section of an operational due diligence questionnaire asks for evidence, not policy. These are the requests that come up most often, and what an engagement puts in the file for each.
A recent independent penetration test
- What goes in the file
- A dated report from an independent firm, scoped to the systems that hold investor data and move money: the email and identity tenant, the investor portal, the cloud environment, and the office network.
Findings rated by severity
- What goes in the file
- A technical report with each finding rated by severity and the steps to reproduce it, sent separately to your IT provider so the questionnaire response stays short.
Proof that findings were fixed
- What goes in the file
- A free retest of remediated findings, with retest results showing what was closed.
A summary the diligence team can file
- What goes in the file
- An executive summary and an attestation letter, which most due diligence questionnaires accept in place of the full technical report.
Email, identity, and wire controls
- What goes in the file
- A phishing campaign against the staff who approve wires and redemptions, and a Microsoft 365 or Google Workspace security assessment covering MFA, conditional access, and mailbox forwarding rules.
Buying a company rather than raising capital? Our cybersecurity due diligence guide covers testing an acquisition target before close, with the target’s written authorization. Firms answering LP questionnaires or testing a portfolio can see private equity cybersecurity.
How it runs
Typical engagements
Illustrative scopes for this industry, written to show what a test covers and what you walk away with.
They are not client stories; our anonymized engagements are on the case studies page.
Typical engagement
Multi-strategy fund preparing for an SEC examination
A multi-strategy fund with a small technology team learns an SEC examination is scheduled and wants its cybersecurity program tested before examiners ask. We run an external test of the remote access and investor-facing services and a cloud test of the AWS environment behind the research platform. A phishing campaign covers the front and back office. The CCO receives an executive summary written for the examination file, the technical report, and retest evidence for every finding.
Typical engagement
Emerging manager ahead of an allocator’s operational due diligence
An emerging manager courting an institutional allocator is asked for an independent penetration test during operational due diligence. We test the Microsoft 365 tenant’s identity controls, the investor portal, and the office network from an assumed foothold. The test finds a path from a standard user account to the shared drive holding investor documents. The fix is retested within the engagement, and the attestation letter and executive summary go into the due diligence questionnaire response.
Typical engagement
Established manager testing wire fraud resilience
An established credit manager wants to know whether its payment controls would survive a targeted attack. We run a red team operation starting with spear-phishing against operations staff and capture a session through an adversary-in-the-middle page. The operators then attempt to alter wire instructions through the compromised mailbox. The operation stops at proof, the timeline is mapped to what the security team detected, and the debrief produces changes to callback verification and MFA.
FAQ
What fund managers ask
01Does the SEC require hedge funds to run penetration tests?
The SEC does not name a testing method. Regulation S-P requires registered advisers and broker-dealers to keep written safeguards for customer information, and its 2024 amendments add an incident response program, customer notice within 30 days, and oversight of service providers. Larger firms had to comply by December 3, 2025 and smaller firms by June 3, 2026. Examination priorities and enforcement actions make clear that advisers are expected to assess and test their cybersecurity controls. A penetration test is the most direct evidence that testing happened. FINRA expects the same of broker-dealers, and both ask who performed the test and what was fixed. RIAs, wealth managers, and family offices that serve individuals are covered on our RIA cybersecurity page.
02What do allocators expect to see during operational due diligence?
A dated test from an independent firm covering the systems that hold investor data and move money, findings rated by severity, and proof of remediation. Most due diligence questionnaires accept an attestation letter and an executive summary. We write both for that audience and provide the technical report separately for your IT provider.
03Does NYDFS 23 NYCRR 500 apply to a fund manager?
Only if the firm operates under a license, registration, charter, or similar authorization under New York’s Banking, Insurance, or Financial Services Law, such as a trust company charter or a virtual currency license. SEC registration alone does not make an adviser a covered entity, and where only an affiliate holds the license, the affiliate is the one covered. Covered firms owe annual penetration testing under section 500.5 unless a limited exemption applies. Our NYDFS cybersecurity regulation guide covers the rest of Part 500.
04We outsource IT to a managed service provider. Can you still test us?
Yes, and we recommend it. The test covers your environment regardless of who runs it, and the findings often land in the provider’s configuration: standing administrative access, shared credentials, or MFA exceptions. We coordinate rules of engagement with the provider, and the report gives you an independent view of the service you are paying for.
05How much does penetration testing cost for a fund?
A phishing campaign starts at $3,600, external network testing at $4,200, cloud testing at $6,800, and a red team operation at $12,500. Each is fixed in writing before work starts. Penetration tests include a free retest of remediated findings. A typical first engagement for a fund combines phishing with an external or cloud test. Funds with an office in the New York metro can add physical penetration testing, from $6,800, to see whether a visitor could reach the trading floor or the server room.
06Can you work on-site with a small team and a short window?
Yes. We are headquartered at 1178 Broadway in Manhattan and meet funds in person for scoping and readouts across the city. Onboarding starts within 24 hours of a signed proposal and testing typically begins within a week. Testing windows are agreed around trading hours and reporting deadlines. Outside the city we work on site with funds in Stamford and Greenwich, and by arrangement with asset managers in Boston and asset managers in Malvern and the Main Line.
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