Senators accuse Yahoo of 'unacceptable' delay in hack discovery

September 27, 2016 10:51 AM EDT

A Yahoo logo is pictured in front of a building in Rolle, east of Geneva, Switzerland December 12, 2012. REUTERS/Denis Balibouse/File Photo


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By Dustin Volz and Lisa Lambert

WASHINGTON (Reuters) - Six senators on Tuesday demanded that Yahoo Inc (NASDAQ: YHOO) explain why hackers' theft of user information for 500 million accounts two years ago came to light only last week and called the company's handling of the breach "unacceptable."

The lawmakers, all Democrats, said they were "disturbed" that the 2014 intrusion, which was disclosed by the company on Thursday, was detected so long after it occurred.

"That means millions of Americans’ data may have been compromised for two years," the senators wrote in a letter to Yahoo Chief Executive Marissa Mayer. "This is unacceptable."

A Yahoo spokesman said the company would respond in a "timely and appropriate manner" to the letter, which was signed by Senators Patrick Leahy, Al Franken, Elizabeth Warren, Richard Blumenthal, Ron Wyden and Edward Markey.

The top U.S. stock market regulator said separately that prompt disclosure by companies of "cyber events" is a priority. Securities and Exchange Commission Chair Mary Jo White, asked about Yahoo, said she could not comment specifically on it.

She earlier said at a conference that SEC examiners in recent months have been checking that companies comply with 2011 agency guidance stressing the need to disclose hacks.

Yahoo has faced mounting questions about exactly when it knew about the 2014 cyber attack that exposed the email credentials of users, a critical issue for the company as it seeks to prevent the breach from affecting a pending takeover of its core business by Verizon Inc (NYSE: VZ).

The internet firm has said it detected the breach this summer after conducting a security review prompted by an unrelated hacking claim that turned out to be meritless. Yahoo has not given a precise timeline explaining when it was made aware of the 2014 attack, or if it knew of the breach before announcing the deal with Verizon in late July.

In a Senate hearing on Tuesday, Federal Trade Commission Chairwoman Edith Ramirez said her agency supported quick disclosures although she declined to say if the FTC was investigating Yahoo.

"In our view, approximately 30 to 60 days (after a breach is discovered) might be appropriate," she told the Senate Commerce Committee. "It is necessary for consumers to be notified so they can take appropriate steps to protect themselves."

In their letter, the senators requested Yahoo brief them on the company's investigation, cooperation with authorities and plans to protect affected users.

The senators asked Mayer for a timeline of the hack and discovery as well as Yahoo's steps to prevent another breach.

Yahoo's shares closed up 2.5 percent at $43.37 each in a broadly bullish market on Tuesday.

The letter came a day after Democratic Senator Mark Warner asked the U.S. Securities and Exchange Commission to investigate whether Yahoo and its senior executives fulfilled obligations to inform investors and the public about the hacking attack, which Yahoo has blamed on a "state-sponsored actor."

The SEC has guidance for companies on reporting hacks, but companies that have experienced breaches often omit details from regulatory filings, a 2012 Reuters investigation found.(http://reut.rs/2dblx5S)

(Reporting by Dustin Volz; Additional reporting by Diane Bartz; Editing by Andrew Hay and Cynthia Osterman)



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