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Business Crimes BulletinFeaturesCybersecurityRegulationWhite Collar Crime

Navigating the SEC's New Cybersecurity Disclosure Rules

By Olivia J. Greer, Catherine Kim and Jeeyoon Chung
May 01, 2024

In December of 2020, SolarWinds Corp. publicly acknowledged a major cyberattack that resulted in supply chain compromise and headline discussions about national security and data security. On Oct. 20, 2023 the U.S. Securities and Exchange Commission (SEC or Commission) charged SolarWinds and its chief information security officer (CISO) with fraud for allegedly failing to disclose known material cybersecurity risks and vulnerabilities.

While the complaint references the cyberattack, the lawsuit notably focuses more on SolarWinds' allegedly "poor cybersecurity practices" and lack of internal controls, and, for the first time, implicates a CISO personally.

The SolarWinds complaint came amidst an ongoing trend of SEC cybersecurity-related enforcement, such as charges brought in 2019 against First American Title Insurance Company, and in 2021 against various broker-dealers and investment advisers, all focused on purported failures to implement adequate cybersecurity controls and procedures and, in particular, deficiencies in internal reporting.

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