Federal Agency To Investigate Yahoo For Taking So Long To Publicize Massive Hack

[REUTERS/Robert Galbraith]

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Eric Lieberman Managing Editor
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U.S. authorities are investigating if Yahoo should have told investors about the reportedly record-setting massive data breaches sooner.

There were two incidences of large-scale theft of personal information: one that affected around 500 million Yahoo users and was fully disclosed in September, but occurred in late 2014, and another that affected around 1 billion users that was announced in December, but occurred in August 2013.

The investigation is expected to focus on the one announced in September, according to The Wall Street Journal.

The Securities and Exchange Commission (SEC), the federal agency that enforces business regulations, filed petitions for certain official documents in order to decipher whether Yahoo properly notified the relevant parties, reports The Wall Street Journal.

Companies are mandated to reveal any cybersecurity vulnerabilities as soon as possible, or as soon as they are known as pursuant to shareholders.

“Cybersecurity risk disclosure provided must adequately describe the nature of the material risks and specify how each risk affects the registrant,” the SEC Division of Corporation Finance wrote in a guidance document in 2011.

Investigators within the SEC will likely try to find out at what point Yahoo knew about the hack and if it knew the true magnitude, among other factors.

Verizon was reportedly cooling on a potential Yahoo acquisition in December after the disclosure of the second immense cybersecurity breach. Verizon is reportedly worried about any legal fallout from the data theft. (RELATED: Yahoo’s Decline Stimulated By Many Obstacles Over Past Year)

But there are signs that the deal is getting closer to finalization, after a filing with the SEC showed that Yahoo and Verizon were undergoing some business arrangements like a name change and restructuring of leadership.

Yahoo isn’t the only tech company forced to undergo SEC investigations. It was disclosed over the summer that the agency was investigating Tesla to find out if the company properly notified investors of the fatal autopilot car crash.

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