The SEC’s Cybersecurity Rules: What They Mean for Florida Public Companies and Reg A Issuers

Navigating Cyber Disclosure Obligations in a Risk-Intensive Digital Era

Cybersecurity is no longer just a technology issue—it is now a material concern for investors, regulators, and corporate leadership. In 2023, the U.S. Securities and Exchange Commission (SEC) adopted enhanced cybersecurity disclosure rules that significantly reshape the reporting landscape for public companies. These rules also carry implications for smaller issuers, including those using Regulation A (Reg A) offerings, which are common among Florida startups and mid-market enterprises seeking capital without a full public registration.

For Florida-based companies, especially those in finance, healthcare, logistics, and real estate, these new obligations raise the stakes. Investors and regulators now expect greater transparency not just after a data breach, but also in how companies govern, assess, and mitigate cybersecurity risks. Failing to meet these standards may lead to SEC enforcement, shareholder lawsuits, or reputational damage.

Consult a Florida securities attorney to discuss the SEC’s cybersecurity disclosure framework and obtain practical guidance for Florida companies looking to stay compliant.

Overview of the SEC’s 2023 Cybersecurity Disclosure Rules

The SEC’s final rule on cybersecurity risk management, strategy, governance, and incident disclosure was adopted on July 26, 2023, and is codified in 17 CFR Parts 229, 232, 239, and 249. It applies to companies subject to the Securities Exchange Act of 1934, including domestic registrants, foreign private issuers, and, depending on circumstances, smaller reporting companies.

Key elements of the rule include:

• Form 8-K Cyber Incident Reporting: Companies must file a Form 8-K within four business days of determining that a cybersecurity incident is “material.” The disclosure must include the nature, scope, and timing of the incident, as well as its material impact—or reasonably likely material impact—on the company’s operations or finances.
• Annual Cyber Risk Disclosures in 10-K: Companies must now describe their processes for identifying, assessing, and managing cybersecurity risks, including oversight by management and the board of directors. These disclosures must be made in the annual Form 10-K, specifically under Regulation S-K Item 106.
• Comparable Requirements for Foreign Private Issuers: These issuers must provide similar disclosures on Form 6-K for incidents and on Form 20-F for risk management.

While these obligations directly apply to fully reporting companies, Reg A issuers—particularly Tier 2 filers that provide ongoing disclosures—should take note. The SEC has not formally extended the cybersecurity rule to Reg A issuers, but regulators have signaled an expectation that all companies raising public capital maintain sound cyber governance practices.

What Triggers a Material Cybersecurity Incident?

A central question for compliance is what qualifies as a “material” cybersecurity incident. Materiality, as in other SEC contexts, hinges on whether a reasonable investor would consider the information important in making an investment decision. This determination must consider both qualitative and quantitative impacts.

Examples include:

• Unauthorized access to consumer or employee data
• Disruption of operations or delivery systems
• Ransomware attacks with financial consequences
• Loss of intellectual property or trade secrets
• Reputational harm from public data breaches

The SEC rules do not require disclosure of specific technical details or vulnerabilities that could be exploited, but companies must provide enough information to meaningfully inform investors of the nature and scope of the threat.

Cybersecurity Governance: A Boardroom-Level Issue

The rule reflects the SEC’s intent to elevate cybersecurity from an IT department concern to a board-level responsibility. Public companies must now describe the board of directors’ oversight of cybersecurity risk, including the frequency and manner of discussions, as well as management’s role in day-to-day risk mitigation.

For Florida companies, especially smaller issuers, this means senior leadership must have a firm grasp on cybersecurity risk posture. It also may require investment in training board members, formalizing cyber risk committees, or ensuring that cybersecurity appears regularly on board meeting agendas.

If management lacks sufficient cybersecurity expertise, the company should consider bringing in third-party advisors or hiring leadership with relevant experience. These steps not only help meet disclosure requirements but also demonstrate good faith efforts to protect stakeholder value.

Implications for Reg A and Emerging Growth Companies in Florida

While the SEC’s final rule does not directly impose new obligations on Reg A issuers, the regulatory environment is evolving. The SEC has made clear through enforcement and commentary that misleading investors, even in exempt offerings, about cybersecurity risks or breaches can trigger liability under Rule 10b-5 and the anti-fraud provisions of Regulation A.

Florida-based Reg A issuers should therefore proactively:

• Include cybersecurity risk factors in offering circulars
• Update disclosures after known incidents, even if informal
• Maintain written cybersecurity policies and incident response plans
• Conduct risk assessments at least annually and document findings
• Train staff on phishing, password hygiene, and response protocols

For companies in regulated sectors, such as fintech, health tech, or property technology, cybersecurity disclosures may be critical to demonstrating credibility and investor readiness.

Staying Ahead of Compliance: Practical Steps for Florida Companies

To meet both the letter and spirit of the SEC’s rules, Florida public companies and Reg A issuers should take the following proactive measures:

• Establish a cybersecurity governance framework involving both management and board oversight.
• Document all cyber risk assessments and mitigation efforts to support future disclosures.
• Review incident response protocols to ensure timely escalation and materiality determination.
• Coordinate with securities counsel and disclosure advisors to prepare Form 8-K filings or Reg A updates.
• Train investor-facing executives on how to describe cybersecurity practices accurately and non-misleadingly.

Contact The Law Offices of Clifford J. Hunt, P.A.

Navigating cybersecurity compliance is now an essential part of corporate governance for public and emerging companies alike. If your Florida-based business is subject to SEC reporting or is preparing a Regulation A offering, The Law Offices of Clifford J. Hunt, P.A. can provide strategic guidance on how to meet cybersecurity disclosure requirements while protecting your legal interests. With over 35 years of experience in securities law, our firm helps businesses adapt to changing regulations and avoid costly missteps.

Contact us today for a consultation to learn how we can support your company’s compliance and capital raising strategy.

Sources:

sec.gov/newsroom/press-releases/2023-139

ecfr.gov/current/title-17/chapter-II/part-229

ecfr.gov/current/title-17/chapter-II/part-232

ecfr.gov/current/title-17/chapter-II/part-239

ecfr.gov/current/title-17/chapter-II/part-249