Securities Regulation Daily Wrap Up, CYBERSECURITY—House appropriations bill would block funds for SEC cyber enforcement, other SEC rules, (Jul 22, 2025)
Proposed House appropriations would cut SEC funding and block the use of SEC funds relating to its cybersecurity disclosure rules, among other rules.
A newly released House appropriations bill would prohibit SEC funds from being used to enforce SEC rules requiring cybersecurity disclosures. The bill would also cut overall SEC funding by 7% from the FY 25 enacted level and restrict various other SEC rulemakings and enforcement, including the climate disclosure rule and Consolidated Audit Trail.
The Financial Services and General Government Appropriations Bill, 2026 was released by the House Appropriations Committee on July 20 and advanced by the Financial Services and General Government Subcommittee on July 21.
Cybersecurity. The bill provides that no funds that it makes available may be used to “implement or enforce” the SEC final rule, Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure’’(88 Fed. Reg. 51896 (August 4, 2023)). The rules became effective September 5, 2023.
The SEC rules require registrants to disclose material cybersecurity incidents on Form 8-K Item 1.05, generally within four business days of the registrant’s determination that an incident is material. The rules also require registrants to disclose their cybersecurity policies and processes.
“Whether a company loses a factory in a fire—or millions of files in a cybersecurity incident—it may be material to investors,” said then-SEC Chair Gary Gensler when the rules were adopted.
However, the SEC rule has come under fire. SEC Commissioners Hester Peirce and Mark Uyeda dissented, and several financial trade associations have called for elimination of the 4-day incident disclosure requirement.
Although the bill would block cybersecurity efforts on the SEC front, it would provide $99 million for the Treasury Department’s Cyber Enhancement Account, as well as $74 million to strengthen the Federal Judiciary’s cybersecurity and information technology initiatives.
Committee Chairman Tom Cole (R-Ok) touted the bill’s cybersecurity funding.
“The bill … enhances national security through key investments in the Committee on Foreign Investments in the United States, cybersecurity, and anti-drug efforts,” said Cole.
SEC funding. The bill would provide $2,034,000,730 for the SEC, which is $153.9 million, or 7 percent, below the FY25 enacted level.
The SEC has requested flat funding of $2.1 billion and will not collect its customary transaction fees, SEC Chair Paul Atkins told the Senate Appropriations committee in June. He said the agency currently has an approximately $100 million surplus due to the recent departure of about 15 percent of SEC staff. The departures follow budget cutting measures by the Department of Government Efficiency (DOGE).
Other blocks. The bill would also block the use of SEC funds for other purposes. The SEC could not use funds made available by the Act to:
Finalize, implement, or enforce the SEC climate rule, ″Enhancement and Standardization of Climate-Related Disclosures for Investors″ (89 Fed. Reg. 21334 (April 12, 2024) or any substantially similar rule;
Finalize, issue, or implement any rule, regulation, or order regarding the disclosure of political contributions, contributions to tax exempt organizations, or dues paid to trade associations;
Implement any program that requires a national securities exchange, a national securities association, or a member of such an exchange or association to collect and provide personally identifiable information with respect to a retail market participant to meet the requirements relating to an order or a reportable event under section 242.613(c)(7) of title 17, Code of Federal Regulations, or any successor regulations thereof;
Review or approve the budget for the Financial Accounting Standards Board (FASB) as described in 15 U.S.C. 7219, until the FASB withdraws the Accounting Standards Update on Income Tax Disclosures issued in December 2023 (No. 2023-09);
Develop, promulgate, finalize, implement, or enforce rulemaking that would, directly or indirectly, create new disclosure requirements under Regulation D or lower the amount of money an issuer can raise through Regulation D.
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