On Oct. 16, 2018, the U.S. Securities and Exchange Commission (SEC) issued an investigative report highlighting issues for public companies related to spoofing cyber-frauds. The SEC’s report focuses on “business email compromises” in which a person successfully masquerading as either a corporate executive or a vendor directs a corporate employee to transfer funds to an account controlled by the perpetrators of the scheme.
The SEC’s report urges issuers to consider whether their current internal accounting controls are sufficient to provide “reasonable assurances” that corporate assets are safeguarded from cyber-related threats. While the SEC did not bring enforcement actions against any of the companies it investigated, future companies victimized by such schemes may not be so fortunate unless they can show that they’ve acted to implement internal accounting controls that minimize the risk of falling prey to these frauds.
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