The U.S. Securities and Exchange Commission (SEC) is investigating Yahoo over the way the company handled two major hacking attacks it suffered in 2014 and 2013, The Wall Street Journal reported on Monday, citing sources with knowledge of the situation. The SEC reportedly started investigating Yahoo last year and requested numerous documents from the firm back in December. The investigation into Yahoo is said to be focused on the manner in which the Sunnyvale-based Internet firm disclosed two data breaches it suffered, as the SEC is trying to determine whether the company violated certain civil securities laws and guidelines by not revealing the breaches sooner. Yahoo could have potentially violated a number of regulations seeing how the company didn't disclose the aforementioned hacking attacks as soon as possible despite the breaches affecting its investors.
The SEC's investigation is expected to focus on the hacking attack from 2014 which Yahoo only disclosed last September despite allegedly being aware of the incident for two years, sources said. While Yahoo did attempt to explain the breach last year, the company has yet to elaborate on the significant delay in disclosure. The data breach Yahoo suffered in 2013 is also said to be a part of the SEC's investigation but likely won't be its main focus seeing how the company only learned of that attack last December and could have hardly acted sooner than it did. The probe into Yahoo's handling of these incidents has only just begun and it will likely be a while before the Commission is ready to go public with its findings.
Insiders say that the SEC is currently focused on identifying Yahoo's potential breaches of its 2011 guidance which mandates disclosure of information pertaining to cyber-attacks and related risks. The Commission has yet to recommend litigation based on its guidance despite conducting numerous similar investigations in recent years, meaning Yahoo's case could be used to set a precedent for any future potential violations. None of this will help the company's efforts to sell its core business to Verizon who was initially looking to consolidate it with its AOL division. However, the Big Red is now reportedly reluctant to acquire Yahoo's Internet division following all the negative publicity the firm received in recent months.