U.S. SEC Public Company Cybersecurity Disclosure Regulation Finalized With Swift Effective Date
On July 26, 2023, the U.S. Securities and Exchange Commission finalized its rule on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies (the Final Rule), which will become effective 30 days following publication in the Federal Register. The Final Rule applies to all public companies subject to the reporting requirements of the Securities Exchange Act of 1934, including foreign private issuers, smaller reporting companies, and business development companies, and will require disclosure of material cybersecurity incidents on Form 8-K and Form 20-F and periodic disclosure of cybersecurity risk management, strategy, and governance in annual reports on Form 10-K and Form 20-F.
U.S. Congressional Leaders Introduce Two Landmark Bills to Create a Digital Assets Regulatory Scheme
This week, two committees in the House of Representatives will mark up legislation intended to clarify the regulatory framework applicable to digital assets in the United States. Earlier this month, leaders in the U.S. Senate also introduced legislation to establish a comprehensive and unified regulatory scheme for digital assets and digital asset derivatives.1 Both the House and Senate bills seek to integrate the regulation of digital assets and digital asset derivatives into the existing U.S. regulatory framework — primarily that of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) — rather than create a standalone framework, but both bills face significant barriers to enactment.
SEC Delays Enactment of Cyber Rules Related to Investment Adviser and Public Companies to October 2023, Updates Timeline to April 2024 for Recently Proposed Cybersecurity Rules
On June 13, 2023, the Office of Management and Budget released its Spring 2023 Unified Agenda of Regulatory and Deregulatory Actions, which includes updates on Securities and Exchange Commission (“SEC”) proposed rules. The SEC pushed back its estimate for the final action date to October 2023 for its proposed cybersecurity rules related to public companies, as well as for its investment advisers and funds proposal. Notably, the SEC’s timelines are typically estimates for implementation, and the proposed rules could be introduced sooner or later than these dates. However, the updated timeline indicates that the SEC is prioritizing finalizing its cybersecurity rules related to public companies and investment advisers and funds.
U.S. Securities and Exchange Commission Proposes Three Rules Related to Cybersecurity, Reopens Comment for One Rule
On March 15, 2023, the U.S. Securities and Exchange Commission (SEC) proposed three rules related to cybersecurity and the protection of consumer information and reopened the comment period for a proposed cybersecurity rule for investment advisers and funds. This significant action would impose new cybersecurity requirements for several SEC-registered entities, including with respect to these entities’ policies, incident response and notification procedures, and cybersecurity risk management. This Sidley commentary and analysis discusses the key features of each proposal, including new requirements and differences among each of the proposals.
FINRA Issues 2023 Report on Its Examination and Risk Monitoring Program
On January 10, 2023, the Financial Industry Regulatory Authority (FINRA) published its 2023 Report on its Examination and Risk Monitoring Program (the Report).1 The 75-page Report includes four new topic areas for 2023: (1) manipulative trading, (2) fixed income — fair pricing, (3) fractional shares — reporting and order handling, and (4) Regulation SHO.
