Lawmakers and SEC chair debate climate disclosure rule defense and data-security risks including the CAT

Lawmakers asked the SEC chairman about the agency's recent decision to halt defense of a climate-disclosure rule and about cybersecurity vulnerabilities in the agency's information systems, including concerns tied to the Consolidated Audit Trail (CAT).

A member told the panel she was "very pleased to see the commission vote to stop defending that controversial climate disclosure rule." Atkins said the rule was adopted the prior year, has pending litigation consolidated in the Eighth Circuit, and that the agency had "put it on ice voluntarily." He said the Eighth Circuit had posed questions and that the SEC is actively studying how to proceed and would answer the court's questions in the coming weeks.

Members also raised past and recent data-security incidents at financial regulators and within SEC systems, including prior hacks and an accidental release of confidential filings. One lawmaker urged the SEC to review the CAT, noting the trail collects sensitive personally identifiable investor information and that breaches would create substantial risk. Atkins said he shares the concern and that the SEC has begun a technology and contractual review; he cited near-term contracting savings as part of that effort.

Atkins said staff identified roughly $90 million in contract rationalizations so far and that the agency plans to undertake an IT "spring cleaning" to shore up cybersecurity and modernize systems. He pledged to review CAT's costs and vulnerabilities and to work with the committee and administration on potential IT investments.

No formal agency action was announced; Atkins said the SEC would respond to pending congressional letters about these matters and would continue work to determine next steps.