A balanced view of cybersecurity and a good read by SEC Commissionaire Elad Roisman to the Los Angeles County Bar Association on cybersecurity and

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A balanced view of cybersecurity and a good read by SEC Commissionaire Elad Roisman to the Los Angeles County Bar Association on cybersecurity and meeting the meeting emerging challenge. Highlighting the challenges organisations face with managing cybersecurity and meeting their regulatory commitments for participation of capital markets.

The SEC has a history of requiring market participants to manage cybersecurity related practices as far back as the Gramm-Leach Bailey Act of 1999 for the protection of customer records. Enforcing its broader powers under the Investments Advisers Act and Securities and Exchange Act. In 2018 the SEC issued guidance underlining the need for Issuers to report cyber incidents and for public firms to ‘take all required actions to inform investors about material cybersecurity risks and incidents in a timely fashion.’ The SEC 2021 regulatory program includes ‘Cyber Risk Governance’, and whilst there is no draft available, with other Federal agencies, it is likely in my view given the importance of the SEC’s role in protecting market liquidity for no regulation to be issued.

Also of note is the SEC’s role in enforcement. The SEC cyber enforcement team was established in 2017 and in 2021 a number of cybersecurity cases have been successfully brought. Again in my view being used to test the legal and regulatory processes of the SEC while enforcing breaches in cybersecurity

The US cyber legislative agenda is increasing significantly bringing proposals for cyber regulation across Federal Agencies, to which the SEC is one. While there is a ‘carrot and stick’ approach, the SEC overseas critical financial markets upon which companies rely for liquidity. The approach of using the ‘Stick’ is more in favour and in my view will be adopted given the significant issues that cybersecurity creates for both the public and private sector.

Brian McCarthy Ted Dziekanowski Jason Spezzano

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