Securities Authorities Expand Cyber-Related Supervision

SEC Cautions Public Companies to Consider Cyber Threats When Implementing Internal Accounting Controls

The Securities and Exchange Commission ("SEC") has issued a press release and an investigative report, which caution public companies to consider cyber threats when implementing internal accounting controls. The report is based on the SEC's investigation into whether nine public companies who were victims of cyber-related frauds, had violated the Securities Exchange Act of 1934 due to insufficient systems with respect to their internal accounting controls.

The investigations focused on business email compromises ("email phishing"), which involved fake emails from persons purporting to be company executives or vendors, prompting their personnel to transfer large sums to bank accounts controlled by the perpetrators.