How To Respond To SEC Inquiries Concerning Data Breach And Data Security Policies

Every company, whether public or private, has exposure to potential data breach or theft of confidential information. When this occurs, various state and federal regulatory organizations have jurisdiction over ensuring that there is prompt, corrective, and remedial action taken by the company whose systems have been compromised. Much of the focus of articles and commentary has been on the Federal Trade Commission and its enforcement of these violations. However, another important agency to understand both its role and practices is that of the United States Securities and Exchange Commission.

The SEC has jurisdiction over the policies and practices of the securities industry to ensure the integrity of the securities exchanges, to assist in capital formation, and to provide investor protection. Pursuant to its statutory authority, it conducts periodic examinations of industry participants, such as investment banks, asset managers, hedge funds, and mutual funds. As such,