Big biz told to reveal hack attacks
Investors need to know about compromises, says SEC
Publicly listed companies in the US have been asked to disclose when they've been hacked, according to new guidance issued by the Securities and Exchange Commission.
The market regulator has let firms know that they can no longer hide cyber attacks if that attack could cause financial damage to the company or make the financial information available to potential investors misleading.
Here's the formal language on the guidance:
Registrants should address cybersecurity risks and cyber incidents in their MD&A [management discussion and analysis] if the costs or other consequences associated with one or more known incidents or the risk of potential incidents represent a material event, trend, or uncertainty that is reasonably likely to have a material effect on the registrant’s results of operations, liquidity, or financial condition or would cause reported financial information not to be necessarily indicative of future operating results or financial condition.
The new guidelines come at a time that more and more prominent and trusted companies become the victims of cybercrime.
Just this week, Sony warned users about a massive brute-force attack against PlayStation and Sony network accounts, of which 93,000 were compromised. And that came just a few months after the whole PlayStation network had to be shut down after a hack attack.
More worryingly, major bank Citigroup was breached in June and the data of 360,000 accounts was exposed.
High-profile hacks like these and the cyber attacks on Google, the US Air Force and the International Monetary Fund have got mere punters worried about security, but the poor old investors are even more concerned because they might lose some money by buying shares in cyber-vulnerable companies.
US Senator Jay Rockefeller had asked the SEC to issue the guidelines to help investors make more informed decisions.
"Intellectual property worth billions of dollars has been stolen by cyber criminals, and investors have been kept completely in the dark. This guidance changes everything," Rockefeller said in a statement, according to Reuters.
"It will allow the market to evaluate companies in part based on their ability to keep their networks secure. We want an informed market and informed consumers, and this is how we do it."
A spokesperson for the Financial Services Authority in the UK told The Register that cyber attacks "would come under our listing rules, which state that companies have to disclose material information". So there's no specific guidance on hacks, but anything that might affect a firm's financials should be disclosed. ®