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Yahoo! agrees to pay $35mn penalty for data breach
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IANS | 25 Apr, 2018
Yahoo!, now known as Altaba, which was charged with failing to disclose a
massive data breach, has agreed to pay $35 million in penalty to the US
Securities and Exchange Commission (SEC).
In a statement late on
Tuesday, the SEC said the entity formerly known as Yahoo! Inc. has
agreed to settle charges that it misled investors by failing to disclose
one of the world's largest data breaches in which hackers stole
personal data relating to its three billion users.
According to
the SEC's order, within days of the December 2014 intrusion, Yahoo's
information security team learned that Russian hackers had stolen what
the security team referred to internally as the company's "crown
jewels".
There "crown jewels" were usernames, email addresses,
phone numbers, birthdates, encrypted passwords, and security questions
and answers for hundreds of millions of user accounts.
The fact
of the breach was not disclosed to the investing public until more than
two years later, when in 2016 Yahoo was in the process of closing the
acquisition of its operating business by Verizon Communications, Inc,
the statement read.
"We do not second-guess good faith exercises
of judgment about cyber-incident disclosure. But we have also cautioned
that a company's response to such an event could be so lacking that an
enforcement action would be warranted. This is clearly such a case,"
said Steven Peikin, Co-Director of the SEC Enforcement Division.
The
SEC statement said that when Yahoo filed several quarterly and annual
reports during the two-year period following the breach, the company
failed to disclose the breach or its potential business impact and legal
implications.
"Instead, the company's SEC filings stated that it
faced only the risk of, and negative effects that might flow from, data
breaches," it added.
In addition, the SEC found that Yahoo did
not share information regarding the breach with its auditors or outside
counsel in order to assess the company's disclosure obligations in its
public filings.
Verizon acquired Yahoo's operating business in June 2017 for $4.48 billion. Yahoo has since changed its name to Altaba Inc.
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