Been Hacked? To Report Or Not To Report… To The SEC, It Isn’t Even A Question.
By Tyler Kirk
In the US, the Securities and Exchange Commission has encouraged its regulated entities to self-report. If entities do not self-report, there is the very real possibility that a whistleblower may disclose a cybersecurity incident to the Commission. Significantly, the SEC has indicated that it would take a more adversarial position against an entity that does not self-report.
When self-reporting cybersecurity incidents to the SEC, it is important to approach the Commission with a well thought out plan for responding to the incident. Moreover, a remediation strategy should be a part of every entity’s cybersecurity policies and procedures.
After a cybersecurity incident, SEC regulated entities, such as investment companies and their boards, should move quickly to establish the scope of the incident, decide whether to self-report to the SEC, and begin the remediation process. According to the Commission, under some circumstances, the SEC has tools available to assist with remediation.
Importantly, self-reporting cybersecurity incidents to the SEC could benefit an investment company and its board by leading to a reduced penalty in the event an enforcement action is brought on the basis of the incident.