On Sept. 20, the U.S. Securities and Exchange Commission (SEC) announced that cybercriminals compromised the agency’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system in May 2016.

Why the sudden disclosure? While the initial vulnerability was detected and patched last year, a statement from the SEC noted that new data uncovered this August suggested that the original security breach “may have provided the basis for illicit gain through trading.” The amount of this potential gain — possibly millions or billions for motivated threat actors — remains unclear, but it’s worth taking a look at what happened to the SEC and what comes next.

Oh, EDGAR

In the statement on the SEC’s website, Chairman Jay Clayton argued that “the intrusion did not result in unauthorized access to personally identifiable information, jeopardize the operations of the Commission or result in systemic risk.” He added that the security weakness “was patched promptly after discovery.”

So what exactly happened? And if no unauthorized data was compromised, what’s the big deal?

While the SEC hasn’t been forthcoming about the details of the security breach, there’s a basic outline of events: Cybercriminals were able to leverage a software vulnerability in EDGAR’s test filing component, which let them infiltrate other portions of the software. This granted access to nonpublic information in the form of corporate financial filings, past financial records and future announcements.

While most financial filing and records are publicly available, the future announcements are cause for concern, since the SEC requires that all companies submit press releases and other data regarding significant market actions prior to these actions taking place.

The result? Malicious actors could have used these documents as the basis for insider trading. And since EDGAR processes 17 million electronic filings per year, malicious actors might have reaped billion-dollar paydays while legitimate investors lost out.

Financial Fixes for This Security Breach?

According to Fortune, the agency is investigating this matter internally and cooperating with law enforcement. SEC Commissioner Michael Piwowar added, “Effective management of internal cybersecurity risk is critical to the SEC.”

So far, however, progress is slow. The SEC breach disclosure was vague enough that experts have begun speculating about potential nation-states or hacktivist groups as the instigators, and there’s still no indication if threat actors used filing data to generate insider windfalls or simply sold this information on the Dark Web.

It may be impossible to know for sure how EDGAR’s data was used and to what effect. Meanwhile, as noted by ZDNet, the audit that originally uncovered this breach also found staff using private, unsecured email accounts to transfer confidential SEC information.

So what’s the solution? Can large public entities like the SEC avoid this type of security breach moving forward? Probably not. But improvements are possible in post-breach responses. For example, while quickly patching the EDGAR hole was a solid first step, the SEC seemingly dropped the ball on the second: determining the type of data stolen and how it could be used.

This is key for public agencies and enterprises alike — responding to attacks that fall outside their control. Not every threat actor can be stopped, and not every piece of software will be perfectly protected. But companies do control their response to security breaches and application compromise.

A good rule of thumb is to assume cybercriminals have breached twice as much as it appears, and have already leveraged stolen data to maximum effect. While this puts companies in a mea culpa situation, it also avoids problems such as a potentially billion-dollar security breach disclosed more than a year after the initial compromise.

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