Sign up for our weekly newsletter!
REGISTER NOW |
||
|
||
Equifax, Intel Help Spur SEC to Update Cybersecurity Regulations![]() Larry Loeb, Author, 2/23/2018
An outcry from investors about the recent breaches of Equifax, as well as the problems happening at Intel, have caused the US Securities and Exchange Commission to update its 2011-era guidelines on how public companies should be handling any cybersecurity incidents. Released this week, the updated SEC guidance actually emphasizes what sort of incidents should be treated as insider information. The new rules state that security flaws and incidents are to be considered as non-public insider information, if they are not announced to the public. This means that information may not be used in management decisions about buying or selling stock in the company.
![]() (Source: iStock)
The SEC put it this way in a statement: Directors, officers, and other corporate insiders must not trade a public company's securities while in possession of material nonpublic information, which may include knowledge regarding a significant cybersecurity incident experienced by the company … In addition, we believe that companies are well served by considering the ramifications of directors, officers, and other corporate insiders trading in advance of disclosures regarding cyber incidents that prove to be material. We recognize that many companies have adopted preventative measures to address the appearance of improper trading and we encourage companies to consider such preventative measures in the context of a cyber event. This takes all the wiggle room out of what the C-level or company officers can do if they know something the public does not. They can't sell company stock while they think the price will be elevated. This was exactly what the CEO of Intel Corp. (Nasdaq: INTC) was accused of doing when he sold $39 million of stock before the recent security problems were announced to the public. (See Intel Offering New Microcode to Fix Spectre & Meltdown.) Additionally, four Equifax executives sold $1.8 million in stock just after their own breach, and months before the public was informed. The Justice Department has an ongoing investigation on that sale. (See Equifax Hacked: Profit Before Protection?) Not only that, the SEC says they will be watching this with an attentive eye: "The Commission, and the staff through its filing review process, continues to monitor cybersecurity disclosures carefully," according to the agency. This differs from the SEC guidance of 2011, which totally ducked the question of cybersecurity incident effects and how it related to inside trading. But more than that, they also make sure companies understand that they are required to establish and maintain "appropriate and effective disclosure controls and procedures," which will result in the accurate and timely disclosures of material events, including those related to cybersecurity.
The SEC hammered home the point that these robust disclosure controls and procedures assist companies in satisfying their disclosure obligations under the federal securities laws. This means that if they have not been implemented by a company, they may find themselves afoul of these same laws. Omitting information in the regulatory filings a company makes will be a real problem as well. The SEC considers omitted information to be material if the omitted information would have been viewed by the reasonable investor as having significantly altered the total mix of information available. That's a pretty wide criteria to be applied and really closes the barn door shut. The commission goes on to state that the materiality of cybersecurity risks and incidents will depend on the range of harm that an incident could cause. That includes the harm to a company's reputation, financial performance, and customer and vendor relationships, not to mention the possibility of litigation or regulatory investigations or action. The SEC did it for real, this time. It has made it very clear just what companies will have to do to avoid being hammered by them in the future. The SEC may have been forced into this by the vagueness of their guidance in the past, but with this document has made up for that. Related posts:
— Larry Loeb has written for many of the last century's major "dead tree" computer magazines, having been, among other things, a consulting editor for BYTE magazine and senior editor for the launch of WebWeek. |
Attackers have already begun to breach security at the BIOS level, according to a new report on BIOS security from Forrester Consulting.
The Sophos Managed Threat Response team found out that, where the Snatch ransomware is concerned, things just more ugly.
The Federal Bureau of Investigation's office in Portland, Ore., uses 'Tech Tuesday' to offer IoT security advice.
One of the most prevalent threats to the financial sector, the Dridex Trojan, was the subject of a recent alert.
Aviatrix, an enterprise VPN company with customers that include NASA, Shell and BT, has recently dealt with a vulnerability that was uncovered by Immersive Labs researcher and content engineer Alex Seymour.
Information Resources
upcoming Webinars
ARCHIVED
Top Tips for Blocking pwned [email protected]$$wOrds in Your Organization
Tuesday, October 29, 2019
12 p.m. New York/ 4:00 p.m. London Podcasts
Podcast: Infrastructure Hunting – Stopping Bad Actors in Their Tracks
Being able to effectively build a threat intelligence ecosystem or threat-hunting identification response requires both user and systems sophistication and capabilities. Security, orchestration, automation and response (SOAR) is a new technology designed to provide organizations a single comprehensive platform they can use to implement an intelligence driven security strategy.
Podcast: Digital Transformation, SD-WAN & Optimal Security
Dan Reis chats to Cybera's Josh Flynn about how to achieve digital transformation without sacrificing security. ![]() like us on facebook
|
|
![]() |
||
![]() |
Security Now
About Us
Contact Us
Help
Register
Events
Supporting Partners
Twitter
Facebook
RSS
Copyright © 2019 Light Reading, part of Informa Tech, a division of Informa PLC. All rights reserved. Privacy Policy | Cookie Policy | Terms of Use in partnership with
|