‘We Need More Money’ for Cybersecurity, SEC’s Piwowar Says

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Andrew Ramonas

The SEC lacks the funds to provide some cybersecurity enhancements that could help the commission better safeguard its data, agency Commissioner Michael Piwowar said March 7.

The Republican’s remarks at a regtech conference in Washington came after the Securities and Exchange Commission asked Congress in February for $45 million and the continued use of a reserve fund to boost its cybersecurity and to take on other technology initiatives. The request was in the SEC’s $1.658 billion budget proposal for fiscal 2019.The money, in part, would go toward improving the SEC’s handling of large volumes of data, including corporate filings in its Electronic Data Gathering, Analysis, and Retrieval system, according to the commission. Hackers breached EDGAR in 2016, the SEC said last year, soliciting concern among lawmakers and others about the agency’s ability to protect its data.

“In order for us to protect this data that the public entrusts us with, we need more money to ramp up some cybersecurity efforts,” Piwowar said at the RegTech Data Summit hosted by the Data Coalition, an advocate for the publication of machine-readable government information.

‘Quaint, Retro’

The commissioner said EDGAR is part of the SEC’s “hipster culture,” which he described as “quaint, retro, and regtech before it was cool.” The agency is working to transform the database from the 1980s into a “next-generation electronic disclosure system,” he said.

Piwowar also reaffirmed his support for the Consolidated Audit Trail, a massive market-surveillance system that is under development. The database would help the commission better investigate illegal trading and market disruption causes.

The CAT, however, first must overcome challenges such as ensuring the protection of personal information, he said. Exchanges and brokers, whose trading details are necessary for the CAT, have relayed worries to the commission about cybersecurity.

Clayton to Testify on Budget

The SEC’s 2019 funding proposal is a 3.5 percent increase from the $1.602 billion it requested for its 2018 budget, which lawmakers still are considering. The agency said it had $1.651 billion in total budget authority for 2017, the last time the amount to fully fund the government was available.

SEC Chairman Jay Clayton has made “very effective efforts” in his cybersecurity funding outreach to congressional appropriators, Piwowar said. Clayton is scheduled to make his case for the agency’s budget in public before a House Appropriations subcommittee in April, Garrett Hawkins, a spokesman for panel chairman Tom Graves (R-Ga.), told Bloomberg Law.

“Cybersecurity is one of Rep. Graves’ top priorities, and he looks forward to discussing the SEC’s budget request with Chairman Clayton,” Hawkins said.

Representatives of other leaders of the congressional subcommittees that handle SEC appropriations didn’t immediately respond to a request for comment.

To contact the reporter on this story: Andrew Ramonas in Washington at aramonas@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Securities & Capital Markets on Bloomberg Law