U.S. Securities and Exchange Commission Cautions Public Companies on Risks Arising from Cyber‑Related Frauds

On October 24, 2018, Cravath prepared for its clients a memo entitled “U.S. Securities and Exchange Commission Cautions Public Companies on Risks Arising from Cyber‑Related Frauds.” The memo summarizes the SEC’s recent report issued under Section 21(a) of the Securities Exchange Act, which was spurred by its investigation of nine public issuers that had been victims of business email compromises. The report details the importance of public issuers considering cyber‑related fraud threats when devising and maintaining their internal accounting controls, and notifies public companies that a failure to maintain a system of internal accounting controls that is calibrated to the risks posed by cyber‑related frauds may result in a violation of federal securities laws and an enforcement action.

Please click here to read the memo.