CyberEconomicNews Briefs

SEC Calls for Better Accounting Controls as Cyber Scams Increase

“Public companies that are easy targets of cyber scams could be in violation of accounting rules that call for firms to safeguard assets, the Securities and Exchange Commission said Tuesday. The SEC said in an investigative report that nine public companies wired nearly $100 million to hackers who impersonated corporate executives or vendors using emails. One company made 14 wire payments to a hacker, resulting in more than $45 million in losses, the SEC said. The agency declined to punish the companies, which weren’t identified. The investigation signaled regulators’ increased scrutiny of companies’ efforts to protect against cyber scams and whether intrusions are made easier due to poor compliance. ‘Cyber frauds are a pervasive, significant, and growing threat to all companies, including our public companies,’ SEC Chairman Jay Clayton said in a statement. ‘Investors rely on our public issuers to put in place, monitor, and update internal accounting controls that appropriately address these threats.’

The type of scam the companies faced, known as business email compromises, have been responsible for more than $5 billion in losses since 2013 and ranked last year as the top cause of estimated losses linked to any cybercrime, the SEC said, citing data from the Federal Bureau of Investigation. SEC officials underscored that many of the scams the companies faced weren’t technologically sophisticated but preyed on ‘weaknesses in policies and procedures and human vulnerabilities,’ according to the seven-page report. The probed companies covered a range of industries including technology, machinery, real estate, energy, financial and consumer goods, according to the SEC. Investigators said company officials—from midlevel personnel to top executives—fell for fraudulent emails. Investigators concluded that the scams succeeded in part ‘because the responsible personnel did not sufficiently understand the company’s existing controls’ or failed to pick up on red flags.”

Source: SEC Calls for Better Accounting Controls as Cyber Scams Increase – WSJ

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