SEC Says It Was a Victim of a Computer Hack Last Year

SEC says hackers may have profited from stolen insider information

The SEC's EDGAR filing system, which is used to process corporate disclosure documents, was the subject of the hack.

Although the problem was nearly immediately patched in 2016, it's noteworthy that the regulator only became aware that the glitch could have provided the basis for "illicit gains through trading" last month. It had a "software vulnerability" that was "exploited and resulted in access to nonpublic information", Clayton said in the statement. It's meant to ensure that all parties have access to the same information at the same time to minimize the ability of some to take advantage of the release of advance financial information.

Much of the information that flows through EDGAR is released to the public immediately.

Mr Clayton said that companies needed to consider whether they were adequately disclosing "information about their risk management governance and cyber security risks" to the public.

Most reports filed with the SEC "generally don't contain super-sensitive information", and any insider trading would have taken place soon after company filings were made but before they were released to the public, said Gary LaBranche, president of National Investor Relations Institute.

The hacking revelation was contained in a general statement on cybersecurity from the SEC chairman, with a brief mention in a subsection on internal security risks. It also found that the SEC did not always encrypt information and had failed to fully implement recommendations from the GAO that would help detect intrusion.

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Here's what we know about the SEC data hack.

"In October 2014, Rep. Carolyn Maloney (D-N.Y.) raised concerns after an academic study revealed that stock prices were moving about 30 seconds prior to public filings being made available on the SECs website". The SEC chairman said this breach did not result in exposing "personally identifiable information".

If the right information gets into the wrong hands it can greatly upset the stability of the market, and if hacks happen it's hard to trust trading on Wall Street to be fair.

The US Securities and Exchange Commission has admitted to being hacked in 2016, with illegal trading potentially at the root of the breach. The SEC regulates what companies must disclose to shareholders about breaches.

"Cybersecurity is critical to the operations of our markets, and the risks are significant and, in many cases, systemic", said Clayton, the agency's chairman, in the statement.

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