Anyone who's run fund operations long enough has seen this coming: LP data accumulates across vintages, and managing the full lifecycle has gotten harder as compliance requirements keep expanding.

A recent data breach confirmed these risks. Last fall, an unauthorized party accessed a single user account at a major law firm serving several leading PE firms and copied files from a shared network drive. While the breach was detected in four days, disclosures took months, with Goldman Sachs and JPMorgan notifying affected investors throughout late December and January. The firm itself eventually reported tens of thousands of individuals affected nationwide, including spouses and agents named alongside them. The records exposed ranged from contact information to Social Security numbers, passport numbers, and government IDs.

What got people's attention across the industry was how it surfaced: how much LP data was reachable from a single account, and how far back it went.

It's a fair question. Three conditions made that breach possible, common enough across the industry that they're worth examining.

The accumulation problem: every fund you've ever closed could still be an open file.

Private markets firms accumulate sensitive LP data across every fund and every service provider relationship. When Fund III closes, the subscription documents, KYC files, and onboarding packets get filed and stay filed. When Fund IV launches, new data joins them. Five years in, a shared drive could hold the complete financial and identity profile of every investor the firm has ever onboarded.

Authentication protects the door. It doesn't limit the hallway.

When a breach surfaces, a typical response would be questioning the authentication protocols. No doubt MFA is a critical baseline for any firm, but it is only one piece of the puzzle. Hardening the door doesn't change what's behind it. The real question is: if an account is compromised, how much can it reach?

In some firms, access could be broader than the role requires. The employee whose account was compromised almost certainly didn't need access to documents from every fund the firm had ever touched. That access existed because the data was there, and the architecture didn't scope it otherwise. Those are two different problems requiring two different fixes.

Scoping access by fund and by role changes the exposure math. A fund admin working on Fund IV shouldn't be able to reach Fund II records. A compromised account then becomes a contained problem rather than an open-ended one.

Your security boundary doesn't end at your firm

No two fund operations are wired the same. Some firms outsource nearly everything to admins and vendors; others keep more in-house yet could still hand off pieces along the way. In many cases, sensitive LP data eventually moves through fund admins, law firms and subscription platforms. This means a firm's security posture is, in practice, the security posture of every counterparty in the chain.

The ‘standard’ onboarding workflow compounds this. Subscription documents go out over email, come back over email, and land on shared drives. It’s the residual copy problem: even after a close, the document exists in multiple inboxes and/or a network drive.

Moving sensitive data out of that workflow is where most firms are heading. Onboarding that runs through a purpose-built platform where LP data is collected, tracked, and stored in one place reduces the number of copies and the surface area. The workflow looks similar from the outside, but the exposure narrows to what's only necessary for the transaction.

GPs also have more leverage in these relationships than is commonly exercised. Service provider agreements can require law firms, fund admins, and other counterparties to engage through a secure platform rather than email, codified in fund vehicle agreements as a condition of involvement.

The amended Reg S-P now requires service providers to notify advisers of incidents within 72 hours, putting teeth on the vendor-oversight expectation. Several firms we work with have started doing exactly this as part of their broader operational tightening.

Three questions worth working through

The SEC's amended Regulation S-P is already in force for larger managers, requiring written incident response programs and 30-day breach notification. And that's just the latest addition to a compliance stack that's been growing steadily. For firms already managing across multiple regulatory frameworks, these questions are worth pressure-testing:

• Do you know where LP PII lives across every fund you've ever managed, including closed ones?

• Does your onboarding workflow route sensitive data through email and shared drives?

• Do your service provider agreements include written cybersecurity representations with breach notification SLAs?

Institutional allocators are already asking these in due diligence. A GP who can answer them clearly signals the kind of operational discipline that LPs are increasingly looking for, especially after watching a breach unfold.

What a different architecture looks like

The direction is clear: purpose-built infrastructure that governs LP data across its lifecycle. But scoping what that looks like starts with understanding the current state.

Managing data across vendors and evolving regulations is complex, so complete visibility doesn't come easily. It has to be built.

Having spent years creating infrastructure for sensitive LP data, our Anduin team builds the platform around the conviction that LP data needs to be managed across its entire lifecycle, with fund-scoped access controls and automated data retention policies. Beyond breach prevention, this kind of architecture also makes it easier to adapt when new regulations land.

Regardless of what infrastructure you use, the audit is worth doing now.