SEC Proposal to Amend Data Breach Regulations

by Doug Pollack

The Securities and Exchange Commission (SEC) is proposing amendments to the Gramm-Leach-Bliley Act (GLBA) and the Fair Credit Reporting Act (FCRA) that would create more specific requirements for safeguarding information and responding to information security breaches.

"Under the proposed amendments, if a covered institution determined that an unauthorized person had obtained access to or used sensitive personal information, and that misuse of the information had occurred or was reasonably possible, the institution also would be required to provide notification, in a clear and conspicuous manner, to each individual identified with the information."

The amendments are currently open for comment. If they go through in substantially their current form, the SEC will be requiring public companies to analyze each data breach for the risk of exposure of personal information, and then, if their determination is that the risk of unauthorized access is "reasonably possible", notify all individuals affected by the data breach.

Currently, there are no federal regulations that require notification of individuals affected by a corporate data breach. There are however numerous states that have notification laws with varying provisions.

It would be a very positive step for all of us if there are federal laws and regulations that would ensure that those affected by data breaches are notified on a timely basis and provided with useful, instructive information. All too often, individuals (millions of them each year) are notified of a data breach in such as way that it causes them great concern, but provides them with little help.