Altaba agreed to settle the case and is expected to pay the fine within 10 days. TipRanks has the stock at a strong buy ranking with a target price of $96.
Altaba, an entity formerly known as Yahoo!, violated Sections 17 (a)(2) and 17(a)(3) of the securities act, according to court documents filed by the SEC, along with several other sections. Altaba agreed to settle the case and is expected to pay the fine within 10 days.
Back in 2014, the team at Yahoo! discovered that its systems were breached, with the data of 500 million users being violated. The company failed to disclose this information to Verizon (NYSE:VZ), which was in the process of acquiring the company.
In September 2016, Yahoo! disclosed the breach and the theft of data, and revealed the information to Verizon. Its market cap fell nearly $1.3 billion by virtue of a 3-percent decrease in share price.
The two companies re-negotiated the deal, but the commission found that Yahoo! violated several of its rules. “As Yahoo! has stated, the company’s relevant legal team had sufficient information to warrant substantial further inquiries in 2014, and they did not sufficiently pursue it,” says a statement.
On March 15, 2017, the US Department of Justice charged four people, including two officers of the Russian Federal Security Service (FSB), for their role in this hack. Attorney General Jeff Sessions of the US Department of Justice announced the charges for the four individuals, one of whom was of Canadian nationality and a resident of Canada.
It was found that the hackers used the data to obtain the contents of accounts at Yahoo!, Google (NASDAQ:GOOGL) and other webmail providers, including accounts of Russian journalists, US and Russian government officials and private sector employees. One of those charged used the data for his personal gain by searching the data for credit card and gift card account numbers.
“Cyber crime poses a significant threat to our nation’s security and prosperity, and this is one of the largest data breaches in history,” said Sessions at the time.
“But thanks to the tireless efforts of U.S. prosecutors and investigators, as well as our Canadian partners, today we have identified four individuals, including two Russian FSB officers, responsible for unauthorized access to millions of users’ accounts. The United States will vigorously investigate and prosecute the people behind such attacks to the fullest extent of the law.”
Following the ruling on Tuesday, Altaba’s share price fell 0.9 percent to close at $69.26. The stock was being traded at $68.03 as of 1:21 p.m. EST on Wednesday (April 25) and was down 1.7 percent. Despite the ruling, the stock has a strong buy ranking on TipRanks with a target price of $96.
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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.