SEC Says Hackers Breached System, Accessed Data

Securities and Exchange Commission Chairman nominee Jay Clayton testifies on Capitol Hill in Washington at his confirmation hearing

Securities and Exchange Commission Chairman nominee Jay Clayton testifies on Capitol Hill in Washington at his confirmation hearing

The US Securities and Exchange Commission has revealed that its electronic company filings system was hacked a year ago and the information may have been traded on, writes Dave Michaels for The Wall Street Journal.

But it is what the unknown hackers were able to see and make use of that has forced SEC to disclose the breach.

The market regulator's filing system in question, EDGAR, had information on everything from statements on the latest mergers and acquisitions, to quarterly earnings. It also hasn't fully implemented a system to detect intruders and doesn't always configure its firewalls properly, which are definitely a cause for concern, since Clayton made cybersecurity his priority.

He was assured in his belief that there was no personal data exposed in the breach.

It also claims that there is no systemic risk from the hack and that it didn't jeopardize the SEC. It issued 26 recommendations that it said would make SEC systems more secure.

In recent years, nation-state and criminal hackers, as well as rogue employees, have stolen data from the Internal Revenue Service, the State Department and intelligence agencies, including millions of government employee files allegedly exfiltrated by the Chinese military, USA officials say.

The statement is part of an ongoing assessment of the SEC's cybersecurity risk profile that Clayton initiated upon taking office in May.

SEC Commissioners did not learn of the breach until recently.

While the 2016 SEC breach was known by the agency, it was never disclosed to the public; the expanded impact of the incident was not uncovered until August, more than one year after the attack.

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Clayton is due to testify to the Senate Banking Commission next week, which should provide further information about the hacking. "The SEC should not retreat from its important market oversight role in order to limit its exposure to sensitive information".

"Failure to do so may result in an enforcement action", he warned, although the SEC is yet to ever bring any such action against a non-complying company.

The agency detected the breach past year, but didn't learn until last month that it could have been used for improper trading.

The disclosure followed public and non-public reports that detailed the SEC's cyber vulnerabilities as well as acknowledgement by the SEC itself of the scope of the risks posed by cyber attacks.

The organization notes that a hack into its system that took place in 2016.

And in July, months after the breach was detected, a congressional watchdog warned that the SEC was "at unnecessary risk of compromise" because of deficiencies in its information systems.

The EDGAR system has sustained data breaches before.

A spokesperson for Equifax said the company is "actively engaging with and being responsive to regulators, federal agencies and legislators and expect to continue to do so in the future". And in 2014, several researchers found that information submitted was available to some users for 30 seconds before it became publicly available, potentially giving some traders an unfair advantage.

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