A New York state law that takes effect next year will make it more difficult for registered investment advisers (RIAs) in the state to conduct proactive testing for violations of their firms’ off-channel communication policies.

The law, A836, signed by Gov. Kathy Hochul on Sept. 14, prohibits an employer “from requesting or requiring that an employee or applicant disclose any username, password, or other means for accessing a personal account through specified electronic communications devices.” The law takes effect 180 days after passage, in March.

The law contains a carve-out for entities that are required to monitor or retain employee communications “under federal law or by a self-regulatory organization,” and there lies the rub for RIAs. While all communications by broker-dealers are required to be monitored and retained by federal securities law, only communications that specifically deal with investment advice are required to be monitored and retained by RIAs.