Yesterday, the Securities and Exchange Commission (the “SEC”) proposed rules seeking to provide a more consistent approach to public company disclosures regarding cybersecurity risk management, strategy and governance, and notifications of material cybersecurity incidents. The proposed rules would require disclosure of a company’s cybersecurity policies and procedures, board of directors’ expertise and oversight of cybersecurity risk, and updates on previously disclosed, material cybersecurity incidents. As proposed, public companies also would be required to report material cybersecurity incidents in a current report on Form 8-K within four business days of the incident. Under current SEC rules, there is no explicit time requirement to disclose cybersecurity incidents, although other SEC guidance has urged public companies to assess the materiality of breaches in determining whether, and to what extent, disclosure is necessary. The SEC expects the proposed rules will result in more consistent and useful disclosures that will better allow investors to evaluate a public company’s exposure to cybersecurity risks and incidents, as well as their ability to manage and mitigate those risks and incidents.
The proposed rule is summarized in the SEC’s Fact Sheet. The public comment period will be open for 60 days following publication of the proposed rules on the SEC’s website or 30 days following publication of the proposed rules in the Federal Register, whichever period is longer.
We will monitor this proposal and provide updates as appropriate. In the interim, if you have any questions about this proposal, please contact a member of Harter Secrest & Emery’s Securities and Capital Markets group at 585.232.6500 or 716.853.1616.
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