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A great overview of the violations the SEC alleges against SolarWinds. The charges levied against SolarWinds by the SEC are in response to what appears to be a blatant failure to remedy significant cybersecurity vulnerabilities and concealing risks from shareholders. Risks that the SEC alleges were material to the company.
The allegations made by the SEC are as a result of the cyber attack against SolarWinds in 2020 that received public attention. The alleged material risks were evident irrespective of the cyber attack, and should have been reported to shareholders under existing disclosure rules. When one reads the SEC charges, they describe a picture of poor cybersecurity, misreporting of material risks and misreporting to investors. That are covered in more detail by the SEC cyber rule effective 5th September 2023.
The SEC Whistleblower program is a well tried and tested. Paying out more that $1.3bn since its inception from total monetary compensation of over $6.3bn (https://lnkd.in/eW3siwXv). One has said many times that as cyber regulation matures, whistleblowers will have the incentives to report organizations for contradictions in cybersecurity reporting. As the SEC charge against SolarWinds documents, insiders knew about the failings of the SDLC and product security.
One wonders what the future holds for SEC covered entities, as reporting under the new cyber rule starts in December 2023, and organizations start to identify material cyber risks, and report those to the SEC under 10K forms. the SEC investigation alleges SolarWinds has material risks prior to the incident, that should have been reported to the regulator and investors. Allegation that the companies core product had more vulnerabilities than the company could fix in a realistic time frame.
The new SEC cyber rule requires covered entities to evaluate the risk of As a third party suppliers. One suspects that many companies do not have the balance sheets big enough, to compensate public and private sector organizations in the event of a regulatory investigations such as the one levied on SolarWinds.
Ted Dziekanowski Brian D. McCarthy Rachel V. Rose, JD, MBA Bob Dix
#paravasecuritysolutions #cybersecurity #cyberriskmanagement
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