Most SEC charges dismissed in SolarWinds hack case
Add Axios as your preferred source to
see more of our stories on Google.
Photo by Suzanne Cordeiro/AFP via Getty Images
A judge has dismissed most of the Securities and Exchange Commission's fraud charges against software firm SolarWinds over comments the company made before and after a late 2020 Russian cyber espionage campaign.
Why it matters: The decision is a major blow for the SEC, which has been pursuing aggressive new policies to hold companies accountable for their cybersecurity practices.
- The agency had never before pursued court actions against the target of a nation-state attack for claims made to investors about cybersecurity practices.
Zoom in: In a ruling Thursday, U.S. District Judge Paul Engelmayer dismissed the charges that SolarWinds misled investors in public filings in its IPO registration documents and 8-K filings.
- However, he said the SEC could pursue securities fraud charges against statements made on the company's website prior to the Russian attack about SolarWinds' cyber strategy.
Catch-up quick: The SEC filed fraud charges against SolarWinds in October, claiming that the company had presented misleading and false statements about its internal cybersecurity practices from October 2018 to January 2021.
- On its website, the company claimed it complied with government-recommended cyber standards, had strong password protections, followed a secure protocol for software development and more.
- However, the SEC alleges that internal conversations suggest the company didn't follow all of those practices mentioned in the statement at the time it was published online and shared with customers.
What they're saying: A SolarWinds spokesperson said in a statement Thursday that the company plans to fight the remaining charge, which it says is "factually inaccurate."
- "We are also grateful for the support we have received thus far across the industry, from our customers, from cybersecurity professionals, and from veteran government officials who echoed our concerns, with which the court agreed," the spokesperson added.
- An SEC spokesperson declined to comment.
What's next: SolarWinds now has 14 days to respond to the remaining charges, according to court documents.
