The SEC proposal will allow investors to protect themselves from the rising threat of data breaches

WASHINGTON, DCLegal Director and Securities Specialist Stephen Hall made the following statement regarding the filing of Better Markets’ comment letter with the Securities and Exchange Commission (SEC) in response to the agency’s proposed rule to strengthen protections of customer information and notify data subjects of data breaches at financial institutions :

“It is unacceptable that market participants today are not required by securities laws to notify Americans when their personal information has been stolen.” The American people should know of any breaches as soon as possible. Otherwise, they could fall victim twice: once when there is a breach that exposes their information, and again when malicious actors use the information to steal their identities, charge their residual accounts, charge their credit cards, or charge their steal investments.

“To that end, the SEC has rightly proposed a rule requiring market participants to notify data subjects. A notification can mean the difference between identity theft that causes large financial losses and a quick response that causes minimal damage. Rapid and rigorous breach notification requirements enable individuals to proactively limit the very real and damaging effects of a breach. They can sign up for credit monitoring services, have their credit reports blocked, and cancel their credit cards. In particular, with regard to violations, financial institutions may open new bank or investment accounts and carefully monitor their financial accounts.

“That’s what the SEC’s proposed rule does: It requires financial firms to notify victims of breaches so they can take immediate action to protect themselves from the potential consequences. We urge the SEC to finalize the proposal without watering down any of its elements. In addition to the obligation to report breaches, we support extending the proposal’s requirements for protecting customer information to include transfer agents, as well as broadly defining the types of customer information that market participants must protect. And in our comment letter we point out some necessary improvements that the Commission should make to the proposal in order to strengthen and shorten the notification process. The need to protect customer information should be undeniable. The improvements proposed by the Commission would benefit both market participants and the customers they serve, as they require companies to protect themselves against the risks that data breaches pose and to respond appropriately when they do occur .”

Read our full comment letter here.

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Better Markets is a nonprofit, nonpartisan, and independent organization formed in the wake of the 2008 financial crisis to increase public interest in financial markets, support Wall Street financial reform, and make our financial system work again for all Americans . Better Markets works with allies — including many in the financial community — to promote pro-market, pro-business, and pro-growth policies that help build a stronger, more secure financial system that protects and promotes Americans’ jobs, savings, retirements, and more. To learn more, visit www.bettermarkets.org.