04:45 PM
Connect Directly

SEC Says Intruders May Have Accessed Insider Data for Illegal Trading

2016 breach of the Securities and Exchange Commission's EDGAR database dents its reputation as a federal cybersecurity enforcer.

The Securities and Exchange Commission's (SEC) credibility as an enforcer of cybersecurity requirements took a bit of beating this week after it disclosed a 2016 data breach that might have given intruders access to nonpublic information for illegal trading.

In brief comments buried in the middle of a long public statement on the agency's cybersecurity posture, SEC Chairman Jay Clayton tied the breach to a software vulnerability in the test filing component of the SEC's EDGAR system.

The breach was discovered and addressed at some unspecified time in 2016. But it wasn't until August 2017 that the SEC learned that the incident might have allowed the intruders to profit illegally through trading, Clayton said, without providing any additional details on how that might have happened. The vulnerability provided access to certain nonpublic information in EDGAR and was patched promptly after discovery, he noted.

EDGAR is an automated system for electronically collecting, validating, accepting, and forwarding disclosure documents from public companies that are required by US law to file with the SEC. On average, the EDGAR system receives and processes some 1.7 million electronic filings annually, a lot of which is publicly available data. Some of the typical data in EDGAR includes statements for IPOs and quarterly and annual reports. But some documents that companies might file voluntarily — such as the proposed sale of securities — may remain nonpublic.

"The EDGAR database contains or has the potential to contain the filings companies make that are labeled as private," says Chris Pierson, chief security officer and general counsel at Viewpost.

For instance, companies can make filings for mergers and acquisitions that they might want to keep private for a period of time. "These are the filings that a hacker would want to find and see as it indicates the intentions of a public company and can be translated into monetary reward," Pierson says.

The incident is the second one that the SEC has disclosed this year involving unauthorized access or misuse of its systems. In May, the SEC announced that it had filed fraud charges against a mechanical engineer who managed to make a fake regulatory filing on the agency's systems in an attempt to manipulate the prices of Fitbit's stock.

The almost complete lack of details surrounding the 2016 breach incident has resulted in some speculation over what might have happened and the true extent of the compromise.

The SEC's language surrounding the breach discovery and vulnerabilities sound intentionally vague, says Atiq Raza, CEO of Virsec Systems. "They are implying that as soon as the vulnerability was discovered, they patched it promptly using all due diligence," he says.

"But this begs more questions: discovered by whom and when?" he says. "It may well be that the SEC discovered an unpatched server that was being exploited, for an unknown, probably long period, and only then took steps to apply critical patches."

Ilia Kolochenko, CEO of Web security firm High-Tech Bridge, says the vagueness of the SEC's disclosure is sure to provoke speculation about nation-state involvement or actions by known cybercrime groups.

"In the financial world, even a press release can make you millions if you get it before everybody else does," Kolochenko says. "In the Equifax situation, victims may be attacked to steal a couple of hundreds of dollars on average, while in this breach smart attackers could potentially make huge amounts of money at the expense of unaware honest investors."

Clayton's disclosure pertaining to an incident that happened back in 2016 has also raised some questions about the SEC's own breach notification obligations.

But some executives such as Jeremiah Grossman, head of security strategy at cybersecurity firm SentinelOne, says the apparent lag is not all that surprising.

"There's no legal obligation I'm aware of for the SEC to ever disclose this kind of breach, or to notify the parties whose data was compromised," Grossman notes. "We're talking EDGAR data, not PII. That might be one possible explanation."

Related content:


Join Dark Reading LIVE for two days of practical cyber defense discussions. Learn from the industry’s most knowledgeable IT security experts. Check out the INsecurity agenda here.

Jai Vijayan is a seasoned technology reporter with over 20 years of experience in IT trade journalism. He was most recently a Senior Editor at Computerworld, where he covered information security and data privacy issues for the publication. Over the course of his 20-year ... View Full Bio

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
The Case for Integrating Physical Security & Cybersecurity
Paul Kurtz, CEO & Cofounder, TruSTAR Technology,  3/20/2018
A Look at Cybercrime's Banal Nature
Curtis Franklin Jr., Senior Editor at Dark Reading,  3/20/2018
City of Atlanta Hit with Ransomware Attack
Dark Reading Staff 3/23/2018
Register for Dark Reading Newsletters
White Papers
Current Issue
How to Cope with the IT Security Skills Shortage
Most enterprises don't have all the in-house skills they need to meet the rising threat from online attackers. Here are some tips on ways to beat the shortage.
Flash Poll
[Strategic Security Report] Navigating the Threat Intelligence Maze
[Strategic Security Report] Navigating the Threat Intelligence Maze
Most enterprises are using threat intel services, but many are still figuring out how to use the data they're collecting. In this Dark Reading survey we give you a look at what they're doing today - and where they hope to go.
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
Published: 2017-05-09
NScript in mpengine in Microsoft Malware Protection Engine with Engine Version before 1.1.13704.0, as used in Windows Defender and other products, allows remote attackers to execute arbitrary code or cause a denial of service (type confusion and application crash) via crafted JavaScript code within ...

Published: 2017-05-08
unixsocket.c in lxterminal through 0.3.0 insecurely uses /tmp for a socket file, allowing a local user to cause a denial of service (preventing terminal launch), or possibly have other impact (bypassing terminal access control).

Published: 2017-05-08
A privilege escalation vulnerability in Brocade Fibre Channel SAN products running Brocade Fabric OS (FOS) releases earlier than v7.4.1d and v8.0.1b could allow an authenticated attacker to elevate the privileges of user accounts accessing the system via command line interface. With affected version...

Published: 2017-05-08
Improper checks for unusual or exceptional conditions in Brocade NetIron 05.8.00 and later releases up to and including 06.1.00, when the Management Module is continuously scanned on port 22, may allow attackers to cause a denial of service (crash and reload) of the management module.

Published: 2017-05-08
Nextcloud Server before 11.0.3 is vulnerable to an inadequate escaping leading to a XSS vulnerability in the search module. To be exploitable a user has to write or paste malicious content into the search dialogue.