Yahoo!, now known as Altaba, which was charged with failing to disclose a massive data breach, has agreed to pay $35 million in a penalty to the US Securities and Exchange Commission (SEC).
In a statement late on 24 April, 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.