A group of US financial trade associations is urging the Securities and Exchange Commission (SEC) to repeal its rule on disclosing cyber incidents, arguing that it puts victims at risk. The rule requires public companies to report significant cyber incidents within a short timeframe. When introduced, the SEC chair said this rule would help investors, companies, and the markets.
However, many in the industry find the rule costly and complicated. Several associations, including the Bank Policy Institute and American Bankers Association, have submitted a petition against it. They claim the rule does not protect companies or investors but instead increases risks for cyberattack victims and goes against the SEC’s main goal of protecting investors.
SEC Seeks To Update Rules Amid Cyber Disclosure Criticism
By forcing companies to disclose breaches before fixing vulnerabilities, the SEC may cause more harm to victims. The rule also stresses national security and law enforcement, creates confusion in the market, and discourages open internal discussions.
The petition also points out that the rule can be exploited by ransomware groups, mentioning how the AlphV gang used it to pressure a victim, MeridianLink, by reporting them to the SEC as part of a ransom demand.
The groups wrote that these requirements add risks, costs, and complexity for SEC registrants and undermine the SEC’s goal to support capital formation. They also said the rules fail to produce useful information that would help protect investors.
Meanwhile, the new head of the U.S. Securities and Exchange Commission (SEC) is focused on updating the agency’s rules and forms to better support the registration of emerging crypto assets. This move addresses a long-standing need within the digital asset industry for clearer pathways to issue assets under U.S. regulations.
SEC Wants Clear Rules And Strong Oversight For Crypto Markets
Securities and Exchange Commission chair Paul Atkins emphasized that the commission holds broad authority under existing securities laws to accommodate the growing crypto industry.
He stated his intention to prioritize creating a “rational regulatory framework” for crypto markets. This framework would set clear rules covering three key areas: issuance, custody, and trading of crypto assets.
The SEC is an independent federal agency responsible for enforcing laws that prevent market manipulation. It oversees several important securities laws and has three main missions: to protect investors, ensure fair and efficient markets, and support capital growth.
To fulfill these goals, the SEC requires public companies to file regular reports, including financial statements and a management discussion and analysis (MD&A). The MD&A explains the company’s past performance and outlines future plans and strategies.