The Year of Cyber Disclosures: Navigating the SEC's New Rules
In December, the SEC's new cybersecurity rules went into effect, requiring detailed reporting by public companies regarding cybersecurity risk management, strategy, governance and—perhaps most notably—incidents. This article offers a practical guide to navigating the new disclosure requirements and an overview of how some companies have already begun to respond, as well as analysis of the SEC's rule in the context of a broader trend of regulatory reporting requirements
April 02, 2024 at 10:00 AM
10 minute read
Cybersecurity
In December of 2020, SolarWinds Corp. publicly acknowledged a major cyberattack that resulted in supply chain compromise and headline discussions about national security and data security. On Oct. 20, 2023 the U.S. Securities and Exchange Commission (SEC or Commission) charged SolarWinds and its chief information security officer (CISO) with fraud for allegedly failing to disclose known material cybersecurity risks and vulnerabilities.
While the complaint references the cyberattack, the lawsuit notably focuses more on SolarWinds' allegedly "poor cybersecurity practices" and lack of internal controls, and, for the first time, implicates a CISO personally.
The SolarWinds complaint came amidst an ongoing trend of SEC cybersecurity-related enforcement, such as charges brought in 2019 against First American Title Insurance Company, and in 2021 against various broker-dealers and investment advisers, all focused on purported failures to implement adequate cybersecurity controls and procedures and, in particular, deficiencies in internal reporting.
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