Biden threatens veto against Senate attempt to repeal SEC cyber incident reporting rule

President Joe Biden would veto a congressional attempt to overturn a Securities and Exchange Commission rule that requires companies to inform investors about cybersecurity incidents, the White House said on Wednesday.

“Reversing the SEC’s rulemaking would not only disadvantage investors who deserve to have a clear understanding of the cyber risk underlying their investment but would also cause companies to undervalue investments in cyber programs to the detriment of our economic and national security,” the White House said in a statement about the resolution, SJ Res 50.

Republican senators introduced the legislation in November, a few weeks before the regulation officially took effect on December 18. House Republicans have filed a companion resolution. There has been no committee action in either chamber on the measure.

Opponents of the SEC rule say it’s an overreach of the agency’s authorities. Rep. Andrew Garbarino (R-NY), lead sponsor of the House resolution, says the Cybersecurity and Infrastructure Security Agency is better suited to handle such notices.

Publicly traded companies began filing the required 8-K notices with the SEC on the first day, and they have steadily appeared since then. Earlier this month, Hewlett Packard and Microsoft both notified the agencies about intrusions by suspected Russian state-backed hackers. Foreign companies with significant U.S. business have filed similar 6-K notices, as well.

The Biden administration sees the SEC regulation not just as support for shareholders, but also as a motivator for corporate cybersecurity efforts.

“The lack of transparency by public companies about cyber incidents impacting their operations and data is fueling increasing cyberattacks across all sectors and all industries,” the White House said. “Greater transparency about cyber incidents, as required in the SEC’s rule, will incentivize corporate executives to invest in cybersecurity and cyber risk management.”

Congress can overturn federal regulations through the Congressional Review Act, which outlines specific steps for passing a joint resolution of disapproval. Lawmakers can overturn presidential vetoes with a two-thirds majority vote in both the House and Senate.