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‘This Is Not Going Away’: Smackdown in Novel Cybersecurity Case Unlikely to Send SEC Into Retreat

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‘This Is Not Going Away’: Smackdown in Novel Cybersecurity Case Unlikely to Send SEC Into Retreat | Corporate Counsel

















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https://www.law.com/corpcounsel/2024/07/23/this-is-not-going-away-smackdown-in-marquee-cybersecurity-case-unlikely-to-send-sec-into-retreat/

The Securities and Exchange Commission filed a fraud lawsuit against SolarWinds last year, marking the first time the agency sued a public company over its response to a cyberattack. Credit: Jerome/Adobe Stock

ANALYSIS

In tossing most of the case against software maker SolarWinds, Judge Paul Engelmayer “creates the notion that the SEC isn’t just going to be able to do whatever it wants going forward and serve as an ‘overzealous’ regulator,” said Scott Kannry, CEO of the cyber risk firm Axio.

July 23, 2024 at 09:47 AM

7 minute read

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What You Need to Know

  • The SEC last year sued the IT software company SolarWinds, calling its cyber risk disclosures overly general and its characterization of a massive 2020 breach misleading.
  • A judge last week gutted most of the case, a big setback for the agency’s push to force companies to provide investors with more detail on their cybersecurity practices and potential vulnerabilities.
  • But experts say that this was just one ruling in one case and that the SEC likely will continue to advance novel legal theories to assert authority over corporate cybersecurity controls.

Security chiefs nationwide found solace in a federal judge’s recent gutting of the Securities and Exchange Commission’s civil fraud lawsuit against SolarWinds, a case that marked the first time the regulator took a public company to court over its handling of a cyberattack.

The turn of events has drawn varied reactions from legal and security experts. While some see the dismissal as a blow to the SEC’s efforts to police companies’ cybersecurity practices, they’re not expecting regulators to back off their quest to force firms to provide greater transparency about their cybersecurity risks and how they’re managing them.

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