Facebook Fines Should Motivate Better Breach Disclosures

By Sanjay Shirodkar (July 31, 2019, 5:06 PM EDT) -- In late July, Facebook Inc. entered into a settlement with the U.S. Securities and Exchange Commission for making misleading disclosures regarding the risk of misuse of its user data. The SEC asserted that the company had discovered the misuse in 2015, but failed to correct its existing risk-factor disclosure for more than two years. Instead, the company's risk factors informed investors that "our users' data may be improperly accessed, used or disclosed."

The company disclosed the incident, but not until March 2018, leading to a large drop in its stock price. The company agreed to pay $100 million to settle the...

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