U.S. regulators fined Altaba Inc, the company formerly known as Yahoo! Inc, $35 million on Tuesday to settle charges that kept its massive 2014 cyber security breach a secret from investors for more than two years.
The Securities and Exchange Commission’s case marks the first time it has gone after a company for failing to disclose a cyber security breach. Altaba agreed to settle without admitting or denying any wrongdoing. A company spokesman declined to comment.
Yahoo’s information security team learned just days after the December 2014 breach that Russian hackers had stolen the company’s “crown jewels,” including email addresses, encrypted passwords and security questions, the SEC said in a statement.
Despite becoming aware of the breach and reporting it to Yahoo’s senior management and legal department, the company failed to properly investigate and did not disclose it to the public until more than two years later, when it was in the process of being acquired by Verizon Communication Inc, the regulator said.
Steven Peikin, co-director the SEC’s enforcement division, said cyber breaches were a priority for the agency and hoped companies facing similar issues would take note.
“The message in this case and the package of remedies here I think is a pretty strong one and I hope will be viewed as a significant penalty by other issuers,” he told reporters on a call.
“We are not seeking to second guess good faith disclosure decisions, or be unsympathetic to the perils that companies face from these kinds of intrusions,” he said, but Yahoo’s material misstatements, omissions and lack of controls fell substantially short of expectations.