SEC Guidance On Cybersecurity For Public Companies

On February 21, 2018, the United States Securities and Exchange Commission (“SEC”) issued guidance regarding cybersecurity-related procedures and disclosures for public companies (the “2018 Release”).  The 2018 Release reinforces and expands guidance that the SEC provided in 2011.  Additionally, the 2018 Release addresses two topics that were not developed in the 2011 guidance, specifically the importance of cybersecurity policies and procedures and the application of insider trading prohibition in the cybersecurity context.

The 2018 Release emphasizes that officers and directors must implement comprehensive controls and procedures for the purposes of guarding against cybersecurity risks and incidents.  Officers and directors must then oversee and regularly assess the adequacy of the procedures and the company’s compliance with such procedures. Companies must also prepare adequate financial statement disclosures regarding cybersecurity risks and incidents.  As part of the disclosure requirements, a company’s principal executive officer and principal financial officer are required to sign certifications regarding the design and effectiveness of controls and procedures.  These certifications must incorporate controls and procedures related to cybersecurity risks and incidents.  The 2018 Release also instructs directors, officers and other corporate insiders to not trade a public company’s securities while in possession of material cybersecurity related information.  The SEC Release can be found here.  A statement from SEC Chairman Jay Clayton can be found here.

About Faruqi & Faruqi, LLP

Faruqi & Faruqi focuses on complex civil litigation, including securities, shareholder derivative actions, merger litigation, antitrust, employment law, wage and hour, and consumer class actions.  The firm is headquartered in New York, and maintains offices in Delaware, Pennsylvania, California, and Georgia.

Since its founding in 1995, Faruqi & Faruqi has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, consumers and employees.

To contact the author of this blog or the offices of Faruqi & Faruqi, please call us at (877) 476-7797.

About Alex B. Heller

Alex B. Heller’s practice is focused on securities litigation.  Alex is an associate in the firm’s Pennsylvania office.

Posted by Alex B. Heller

Associate at Faruqi & Faruqi, LLP
Pennsylvania Office
Tel: (215) 277-5770
Fax: (215) 277-5771

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