Anticipating tough questioning from the Senate Banking Committee regarding the SEC’s EDGAR system breach, the SEC late yesterday announced a new unit targeting cyber risk and a retail task force to identify fraud targeting retail investors, with a particular eye on cryptocurrency. Despite this prophylactic, cyber risk disclosure was a central concern on which Chairman Clayton was quizzed with Chairman Crapo (R-ID), Ranking Member Brown (D-OH) and others pushing for action even though Mr. Clayton agreed that more disclosure is needed and that the existing concept of materiality applies. The latter point is likely to have significant impact as enforcement staff review disclosures in the wake of Equifax and other publicly-traded firms. Sens. Crapo and Scott (R-SC) also targeted the DoL’s Fiduciary Rule and SEC investor standards, leading Mr. Clayton to reiterate that the SEC is reviewing it as quickly as possible. Ranking Member Brown urged the SEC Chair to complete Dodd-Frank rulemakings regarding derivatives, incentive compensation, clawbacks, and hedging equity compensation.
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