SEC adopts new rules for cybersecurity breach disclosures from public companies

The Securities and Exchange Commission adopted rules requiring registrants to disclose material cybersecurity incidents they experience and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy, and governance. The Commission also adopted rules requiring foreign private issuers to make comparable disclosures.”Whether a company loses a factory in a fire – or millions of files in a cybersecurity incident – it may be material to investors,” said SEC Chair Gary Gensler. “Currently, many public companies provide cybersecurity disclosure to investors. I think companies and investors alike, however, would benefit if this disclosure were made in a more consistent, comparable, and decision-useful way. Through helping to ensure that companies disclose material cybersecurity information, today’s rules will benefit investors, companies, and the markets connecting them.” The new rules will require registrants to disclose on the new Item 1.05 of Form 8-K any cybersecurity incident they determine to be material and to describe the material aspects of the incident’s nature, scope, and timing, as well as its material impact or reasonably likely material impact on the registrant. An Item 1.05 Form 8-K will generally be due four business days after a registrant determines that a cybersecurity incident is material. The disclosure may be delayed if the United States Attorney General determines that immediate disclosure would pose a substantial risk to national security or public safety and notifies the Commission of such determination in writing. Publicly traded companies in the space include Barracuda (CUDA), Check Point (CHKP), Crowdstrike (CRWD), CyberArk (CYBR), F5 Networks (FFIV), Fortinet (FTNT), Imperva (IMPV), NortonLifeLock (NLOK), Okta (OKTA), Palo Alto Networks (PANW) and Qualys (QLYS).