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Security Newswire

Cyber Security -- Regulations

Despite SEC Rule, Cybercrime Disclosures Rare

June 29, 2012

Amid whispers of sensational online break-ins resulting in millions of dollars in losses, it remains remarkably difficult to identify corporate victims of cybercrimes. Companies are afraid that going public would damage their reputations, sink stock prices or spark lawsuits, an Associated Press article reports.

Hackers broke into computers at hotel giant Wyndham Worldwide Corp. three times in two years and stole credit card information belonging to hundreds of thousands of customers, the AP article states. Wyndham didn't report the break-in in corporate filings even though the Securities and Exchange Commission wants companies to inform investors of cybercrimes.

The FTC is now suing Wyndham Worldwide for alleged security failures.

The chairman of the Senate Commerce, Science and Transportation Committee, Sen. Jay Rockefeller, D-W.Va., is adding a provision to cybersecurity legislation that would strengthen the reporting requirement. The SEC's guidance, issued in October, is not mandatory, but it was intended to update for the digital age a requirement that companies report "material risks" that investors want to know, according to the Associated Press.

Rockefeller's measure would direct the SEC's five commissioners to make clear when companies must disclose cyber breaches and spell out steps they are taking to protect their computer networks from electronic intrusions, the article says.

Cybercrime is a global problem – the head of Britain's domestic spy agency, MI5 Director General Jonathan Evans, said this week that cybersecurity ranks alongside terrorism as one of the United Kingdom's most pressing security challenges.

"What is at stake is not just our government secrets but also the safety and security of our infrastructure, the intellectual property that underpins our future prosperity, and the commercially sensitive information that is the lifeblood of our companies and corporations," Evans said.

According to the article, research by a cybersecurity expert shows dozens of Fortune 500 companies have lost a wide range of valuable information to cybercrimes, including intellectual property, bank account credentials, restricted data about patients of pharmaceutical companies and internal legal records.

Rodney Joffe of Neustar, an Internet infrastructure management company in Virginia, found evidence that 162 out 168 companies in the manufacturing, chemical and transportation sectors had been compromised, the article says.

The SEC isn't tracking how many companies comply with its cybersecurity guidance, AP reports. But publicly traded companies historically have resisted supplying information about cyber incidents because it highlights their weak spots, said Peter Toren, a former federal prosecutor with the Justice Department's computer crime division.

The new SEC guidance puts pressure on companies to decide whether to disclose a breach or keep it secret, said Jody Westby of Global Cyber Risk, a consulting firm, in the AP article. But she said the demand for information amounts to locking the door after the house has been robbed.

"The SEC would have done better to require all public companies to say whether they've taken actions to implement a security program," Westby said.

KEYWORDS: cyber security cybercrime data breach

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