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undergroundnewsroom.com December 16, 2017


An SEC hack may have resulted in illicit trading, chairman says

22 September 2017, 12:49 | Jenny Fowler

Securities and Exchange Commission Chairman nominee Jay Clayton testifies on Capitol Hill in Washington at his confirmation hearing

Securities and Exchange Commission Chairman nominee Jay Clayton testifies on Capitol Hill in Washington at his confirmation hearing

Photo The Securities and Exchange Commission said a digital attack past year may have exposed information that could have been exploited for trading purposes.

The Securities and Exchange Commission said in a statement that it was still investigating the breach of its corporate filing system.

The 27-page report by the Government Accountability Office found the SEC did not always fully encrypt sensitive information, used unsupported software, failed to fully implement an intrusion detection system and made missteps in how it configured its firewalls, among other things.

This includes the possibility that hackers have used information gained in the hack to take part in illicit gain through trading. He blamed software vulnerably for the intrusion and said it was "patched promptly after discovery".

While the "incident" had been detected when it occurred in 2016, an internal audit ordered by Chairman Clayton discovered this August that nonpublic information was disclosed that could have been used by someone to gain an advantage in stock transactions.

EDGAR holds non-public information on corporate announcements, including mergers and acquisition filings and quarterly statements.

The SEC did not respond when asked about that review or whether it triggered the disclosure, but Clayton said in his Wednesday statement that he began reviewing the agency's cyber risk in May.

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SEC Chairman Jay Clayton said the SEC detected the problem with the Edgar system, a main clearing house for filings by public companies, in 2016 and fixed it. The statement also detailed steps the SEC is taking to shore up its cybersecurity through the appointment of a new senior-level security workgroup, risk monitoring, and incident response improvements. The SEC said that the breach did not result in unauthorized access to personally identifiable information (PII), jeopardize the operations of the agency, or result in systemic risk.

"It's hugely problematic and we've got to be serious about how we protect that information as a regulator", Huizenga said.

"The chairman obviously recognises the irony of the SEC potentially serving as the unwitting tipper in an insider trading scheme", said John Reed Stark, president of a cyber consulting firm and a former SEC staff member.

The admission of the potential insider trading that may have resulted from the SEC breach came 1,400 words into a post of more than 4,000 words about how the SEC "is focused on identifying and managing cybersecurity risks".

"I recognize that even the most diligent cybersecurity efforts will not address all cyber risks that enterprises face", Clayton wrote.

In this case, the men were accused of using hackers to break into companies like Business Wire and PR Newswire over a period of five years to steal 150,000 not-yet-public news releases of publicly traded companies.



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