Latest Cyber Rule May Offer Preview of What SEC Plans for Funds

Jackie Liu spoke to BoardIQ about the Securities and Exchange Commission’s (SEC) recent cybersecurity rule for public companies, which offers a few clues about how the regulator might approach a similar rule proposed for funds and fund advisors.

According to Jackie, while the SEC’s new rule requires disclosure only when the company determines a cyber event is material, public companies should also keep close records of instances where they determine the opposite. Doing so may be useful if a member of the plaintiffs bar learns of a hack that a company didn’t report.

“I can see how the plaintiffs could put together a class action: ‘If we had known about this incident, we would not have bought this stock,’” Jackie said.

She added: “From a protective, defensive standpoint, if something is straddling the line, I think the company should have documents – maybe privileged, a memo of some sort – that explain why they did not believe an event was material.”

Read the full article (subscription required).