Yahoo Hack: Head Lawyer Resigns

Karim Yahoo, 22, an immigrant from Kazakhstan, was arrested on a US warrant in March for alleged hacking, commercial espionage and related crimes. Photo by Justin Sullivan/Getty Images)
Yahoo

Yahoo’s top lawyer, Ronald S. Bell, resigned Wednesday after a board investigation of the 2014 theft of information on more than 500 million user accounts.

Senior executives, company lawyers and information security staff were aware of the hack in 2014 and also knew about subsequent attempts to break into the affected accounts in 2015 and 2016, but failed to “properly comprehend or investigate” the situation, the company’s board of directors said in a securities filing on Wednesday.

The board “did not conclude that there was an intentional suppression of relevant information.”

Those hackers, which Yahoo believes were connected to a foreign government, used the stolen information to forge a type of software called a cookie that could be used to access 32 million Yahoo accounts, the company said.

The company’s filing, which it said concluded its investigation, avoided naming any individuals responsible for Yahoo’s security woes, and it left many important questions unanswered.

The board offered no new information about the company’s apparent failure to notice a separate theft in 2013 of the account information of one billion users.

That theft — which was discovered last year by an outside security expert who noticed the information for sale on the black market — was so serious that Yahoo forced all affected users to reset their passwords. “We have not been able to identify the intrusion associated with this theft,” the board said.

Mr. Bell, a longtime lawyer at Yahoo, appears to be taking the blame for the company’s security failures. Yahoo said he resigned on Wednesday and would receive no payments in connection with his departure. The company’s chief information security officer at the time of the 2014 breach, Alex Stamos, left for Facebook in 2015 after repeated battles with Ms. Mayer over security priorities.

Yahoo said that 43 consumer class-action lawsuits related to the breaches have been filed against the company in federal, state and foreign courts. It also faces a stockholder class-action suit.

The company said that it is also cooperating with federal, state and foreign government officials and agencies seeking information about the incidents, including the Securities and Exchange Commission, the Federal Trade Commission, the United States attorney’s office for the Southern District of New York and two state attorneys general.

Yahoo said it had revised its procedures for responding to cybersecurity incidents, including the reporting of such incidents to senior executives and the board.

The company has incurred $16 million in direct costs so far related to the breaches.

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