Lessons for CISOs from the SolarWinds Breach and SEC Enforcement

In 2020, SolarWinds disclosed that it had been subject to a cyberattack, commonly referred to as "SUNBURST." SUNBURST is believed to have been conducted by Russian state-sponsored hackers and affected over 18,000 customers, including government agencies and Fortune 500 companies. See, Complaint, Securities and Exchange Commission v. SolarWinds Corp. et al, Case No. 1:23-cv-09518. Filed Oct. 30, 2023. Attackers compromised the infrastructure of SolarWinds, a leading provider of IT management software, to distribute malicious updates to the company's Orion software.

In response to the breach, on Oct. 30, 2023, the SEC sued SolarWinds and its CISO, Timothy G. Brown, in connection with the SEC Division of Enforcement's investigation of the cyberattack. Id. The SEC alleges that from October 2018, when SolarWinds went public, to January 2021, SolarWinds and Brown "defrauded SolarWinds" investors by overstating SolarWinds' cybersecurity practices and understating or failing to disclose known risks. See, "SEC Charges SolarWinds and Chief Information Security Officer with Fraud, Internal Control Failures," U.S. Secrities and Exchange Commission. Oct. 30, 2023. In its filings with the SEC, SolarWinds allegedly misled investors by disclosing only generic and hypothetical risks at a time when SolarWinds and Brown knew of specific deficiencies in SolarWinds' cybersecurity practices as well as the increasingly elevated risks the company faced at the same time. See, Amended Complaint, Securities and Exchange Commission v. SolarWinds Corp. et al, Case No. 1:23-cv-09518. Filed Feb. 16, 2024. Recently, the SEC filed an amended complaint that lays out the same claims it made against the company last fall, only in greater detail. Id.