U.S. SEC considering action against SolarWinds over cyber disclosures

SolarWinds

03/11/2022 21:25

Nov 3 (Reuters) - The U.S. Securities and Exchange
Commission has recommended an enforcement action against
SolarWinds Corp  SWI.N  over its public statements on
cybersecurity and procedures governing such disclosures, the
software firm said on Thursday.
    The Austin, Texas-based company also said in a filing with
the SEC that it has tentatively agreed to pay $26 million to
settle a shareholder lawsuit about the software company's
cybersecurity disclosures ahead of a massive breach.
    SolarWinds did not admit wrongdoing in the settlement, which
requires approval by a judge.
    The company was at the center of a cybersecurity crisis in
December 2020, after hackers compromised SolarWinds software
updates and used them to access the data of thousands of
companies and government offices that used its products. The
U.S. government has attributed the hack to Russia.
    SolarWinds said Thursday it had received a Wells notice from
the SEC alleging the company violated U.S. securities law "with
respect to its cybersecurity disclosures and public statements,
as well as its internal controls and disclosure controls and
procedures."
    While a Wells notice does not necessarily mean the
recipients have violated any law, the SEC issues the letter to
firms when it is planning to bring an enforcement action against
them.
    SolarWinds said it will respond to the notice, and
"maintains that its disclosures, public statements, controls and
procedures were appropriate."
    A spokesperson for the SEC did not immediately reply to a
request for comment.
    Investors sued SolarWinds in 2021, alleging the company and
two executives touted cybersecurity measures publicly while
prioritizing cost cutting and profit for SolarWinds' two largest
investors.
    The case is Bremer v. SolarWinds Corp et al., No.
21-cv-00002, U.S. District Court, Western District of Texas.
 (Reporting by Jody Godoy in New York; editing by Richard
Pullin)
 ((Jody.Godoy@thomsonreuters.com;))