The House Financial Services Committee has approved a bill, the Investor Protection Act, which requires to Internet Service Providers (ISPs) to block any traffic on their networks which fraudulently invokes the Securities Investor Protection Corporation, Failure to do so will make the ISPs subject to court injunctions and liable for any damages that result from the fraud.
The SIPC’s job is to protect investor assets when a brokerage firm fails. The committee found that fraudulent actors on the Internet and elsewhere sometimes represent themselves as legitimate.
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Note that the rules include any data simply routed through the network. This amounts to a requirement that all data on the network be subject to deep packet inspection and contextual analysis. This is an enormous, potentially crippling burden for ISPs, both large and small. Even if representations are found that someone represents the SIPC, it’s not clear how the ISP is supposed to determine if it’s fraudulent. And the bill doesn’t appear to make any allowances for data encryption, which would probably make the ISPs duties impossible to implement.























