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It’s from the left field, but we know that financial reporting to financial markets is core to stock and market stability. As the 75% fall in GE’s stock price attests (2017 and 2018). SEC’s order finds that GE violated the antifraud, reporting, disclosure controls, and accounting controls provisions of the securities laws. Resulting in a $200Mn fine for materially misleading investors
Why is this important? The SEC has raised concerns of cyber as a material risk and the importance of appropriate oversight and reporting. With a focus on cyber enforcement actions. (https://lnkd.in/eNGXyHx).
Will significant fines for failing to report appropriate material cyber risks and incidents follow if they impact shareholder value? Credit rating agencies such as Moodies and S&P focus on cyber risk in setting credit score and hence impact the cost of capital for listed companies. Moodies downgraded Equifax (senior unsecure rating) in April 2020 following concerns about weak cashflow, due to elevated technology infrastructure investments, and economic headwinds.
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