SEC Proposes To Vote On The New Law To Enhance Privacy And Cybersecurity

Key Points:

• Brokers and asset managers will be required to tell their clients of data SEC as part of a slew of cybersecurity-related measures scheduled to be voted on Wednesday by the SEC.
• In addition, the government will consider whether to propose a new regulation requiring brokers, clearing houses, and other organizations to have documented processes in place to deal with threats.
• A third proposal targeted at increasing the resilience of market infrastructure will also be evaluated by commissioners.

The Securities and Exchange Commission (SEC) will vote on new regulations and adjustments to strengthen cybersecurity, privacy, and technology infrastructure standards, which officials say may include cryptocurrency.

The five-member panel will vote on cybersecurity, consumer financial information privacy, and technological infrastructure, such as cloud services, as part of a slew of cybersecurity-related laws, on Wednesday.

An existing law compels covered firms to tell customers about how they use their financial information, but there is no duty to notify them about breaches, according to SEC Chair Gary Gensler.

“I think we should close this gap. Thus, under our proposal, covered firms would be required to notify customers of breaches that might put their personal financial data at risk. I believe that these amendments, if adopted, would help customers maintain their privacy and protect themselves.” Gensler said in a statement.

The agency will also decide whether to propose a new rule requiring brokers, clearinghouses, and other companies to have written procedures in place to address threats.

The customer notification rule would give businesses no more than 30 days to notify individuals whose sensitive information was likely accessed without consent. The new rule would be added to the agency’s 24-year-old legislation overseeing financial institutions’ data privacy, which Gensler linked to rising claims of identity theft.

According to an agency official, neither of these plans would feature a unique carve-in or carve-out for cryptocurrency. The improvements would apply to the degree that information systems interact with crypto, according to the official.

In September, a subsidiary of Morgan Stanley agreed to pay $35 million to settle SEC allegations, according to Gensler. Throughout a five-year period, it failed to protect personal information.

The agency commissioners will also evaluate a third proposal aimed at improving the resilience of market infrastructure, such as trading platforms and clearing agencies, in order to account for emerging threats and increased use of cloud-service providers.

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