SEC announces ‘Cyber Unit’ to investigate ICOs and DLT

The Securities and Exchange Commission (SEC) has announced a new initiative that it says will address “cyber-based threats and protect retail investors”. Branding its new division the Cyber Unit, the SEC says it will focus on offenses related to:

  • Misconduct perpetrated using the dark web

  • Market manipulation schemes involving false information spread through electronic and social media

  • Violations involving distributed ledger technology and initial coin offerings

  • Hacking to obtain material nonpublic information

  • Intrusions into retail brokerage accounts

  • Cyber-related threats to trading platforms and other critical market infrastructure

—  Stephanie Avakian, Co-Director, SEC’ Enforcement Division

According to Stephanie Avakian, Co-Director of the SEC’s Enforcement Division “Cyber-related threats and misconduct are among the greatest risks facing investors and the securities industry,” and she says the new unit will improve the SEC’s ability to “detect and investigate cyber threats through increasing expertise in an area of critical national importance.” 

Alongside the Cyber Unit, the SEC has also unveiled its Retail Strategy Task Force, which it says will use data analytics and technology to identify large-scale misconduct affecting retail investors. “Protecting the welfare of the Main Street investor has long been a priority for the Commission,” says Steven Peikin, Co-Director of the SEC’s Enforcement Division.  “By dedicating additional resources and expertise to developing strategies to address misconduct that victimizes retail investors, the division will better protect our most vulnerable market participants.”