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The successor to Yahoo, Altaba, has been hit with a $35 million fine by the US Securities and Exchange Commission related to a massive 2014 data breach that exposed the personal data of 500 million users.
The SEC announced the multimillion dollar fine on April 24, noting that Yahoo failed for nearly two years to disclose the data breach to its customers, despite that fact that company insiders, including top managers, knew about it for months.
It wasn't until Yahoo was about to be sold to Verizon in 2016 that the company admitted to the data breach.
In December 2014, investigators believe that Russian hackers stole Yahoo's "crown jewels," which included the usernames, email addresses, phone numbers, birthdates, encrypted passwords, as well as security questions and answers for nearly 500 million user accounts.
Later, Yahoo and its successor companies were forced to admit to a second massive cyberbreach that affected as many as 2 billion accounts, including users of Yahoo email, Tumblr, Fantasy and Flickr. (See Yahoo Breach News Just Gets Worse.)
During those two years between the 2014 data breach and the Verizon sale, the SEC investigation found that Yahoo filed several quarterly and annual reports, but did not disclose the breach to federal officials. The company also did not share details with its outside auditors or legal counsel.
Finally, the SEC found that Yahoo's security team did not have procedures in place to disclose the data breach.
In a statement released Tuesday, Jina Choi, director of the SEC's San Francisco Regional Office, noted:
Yahoo's failure to have controls and procedures in place to assess its cyber-disclosure obligations ended up leaving its investors totally in the dark about a massive data breach. Public companies should have controls and procedures in place to properly evaluate cyber incidents and disclose material information to investors.
Eventually, the US Department of Justice indicted four people, including two associated with the Russian Federated Security Service (FSB), with the 2014 hack. Despite the data breaches and failure to disclose those to the public, Verizon eventually bought Yahoo and renamed it Oath and former CEO Marissa Mayer walked away with a $23 million payout. (See Unknown Document 731194.)
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— Scott Ferguson is the managing editor of Light Reading and the editor of Security Now. Follow him on Twitter @sferguson_LR.
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