Cybersecurity » Implementing the SEC’s Cybersecurity Disclosure Rules

Implementing the SEC’s Cybersecurity Disclosure Rules

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September 18, 2023

Legal Ops professionals will be interested in this final post in the three-part blog from on the U.S. Securities and Exchange Commission’s (SEC’s) final rules for cybersecurity disclosures.

The SEC acknowledges that materiality determinations require informed and deliberative processes, but states that a registrant should not delay determination of materiality solely when continued investigation is needed. If a cybersecurity incident is determined to be material, the clock to file an Item 1.05 Form 8-K with the SEC begins within four business days.

To help senior management make a materiality determination, the cybersecurity experts need to notify them of the known facts, the areas of uncertainty, and any items that remain unknown.

  • Registrants should develop decision trees or playbooks providing examples of material and non-material cybersecurity incidents that can guide corporate leaders’ decision-making.
  • Companies should have an escalation process and maintain activity/response logs including what steps are taken in response to each incident, as well as closure and the conclusion on whether or not a particular incident was material.

Registrants should identify events that will trigger secondary consequences or additional compliance requirements. It would be ironic if the legacy of the SEC’s four-day deadline turns out to be premature corporate disclosures followed by an influx of premature lawsuits.

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