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Cybersecurity Internet Law

BREAKING NEWS
Yahoo General Counsel Ron Bell Resigns Amid Data Breach Controversy

Yahoo Inc. announced on March 1 that general counsel Ron Bell is leaving the tech giant after an investigation of the company revealed that its legal team failed to sufficiently inquire into a massive 2014 cybersecurity breach.

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Yahoo Inc. announced on March 1 that general counsel Ron Bell is leaving the tech giant after an investigation of the company revealed that its legal team failed to sufficiently inquire into a massive 2014 cybersecurity breach.

According to a March 1 filing with the U.S. Securities and Exchange Commission, Bell “resigned as the Company’s General Counsel and Secretary and from all other positions with the Company” effective March 1.  The filing said that “[n]o payments are being made to Mr. Bell in connection with his resignation.”

In addition to announcing Bell’s departure, the filing revealed the results of an investigation by an independent committee of Yahoo’s board of directors, with assistance from law firm Sidley Austin, into a 2014 hack of the company’s networks that impacted at least 500 million customer email accounts.

Yahoo, which did not immediately respond to request for comment on Bell’s departure, explained in the filing that certain senior executives at Yahoo as well as members of its legal team “had sufficient information to warrant substantial further inquiry in 2014” about a hack by a state-sponsored actor into the company’s networks, but “they did not sufficiently pursue it.”

“As a result, the 2014 Security Incident was not properly investigated and analyzed at the time and the Company was not adequately advised with respect to the legal and business risks associated with the 2014 Security Incident,” the filing said. “The Independent Committee found that failures in communication, management, inquiry and internal reporting contributed to the lack of proper comprehension and handling of the 2014 Security Incident.”

The company did not disclose the 2014 data breach to the public until September 2016. Then, in December 2016, the company admitted that it had suffered yet another breach in 2013, that had affected more than one billion user accounts.

Aside from raising questions about the company’s security and disclosure practices, the delayed public disclosure of the two massive breaches has at times led to speculation that Verizon Communications Inc.’s acquisition of Yahoo’s operating business may be in jeopardy.

A Feb. 21 SEC filing from Verizon, however, revealed that the deal is moving forward, though the price has been reduced by $350 million, from approximately $4.83 billion in cash to roughly $4.48 billion.

***** Jennifer Williams-Alvarez writes for The Recorder, an ALM sibling of Internet Law & Strategy

The views expressed in the article are those of the authors and not necessarily the views of their clients or other attorneys in their firm.

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