{"id":48521,"date":"2022-09-20T13:31:27","date_gmt":"2022-09-20T13:31:27","guid":{"rendered":"https:\/\/packetstormsecurity.com\/news\/view\/33857\/Shareholders-File-Suit-Against-Twitter-Following-Former-CISOs-Warnings.html"},"modified":"2022-09-20T13:31:27","modified_gmt":"2022-09-20T13:31:27","slug":"shareholders-file-suit-against-twitter-following-former-cisos-warnings","status":"publish","type":"post","link":"https:\/\/www.threatshub.org\/blog\/shareholders-file-suit-against-twitter-following-former-cisos-warnings\/","title":{"rendered":"Shareholders File Suit Against Twitter Following Former CISO’s Warnings"},"content":{"rendered":"
\n
\"The
Twitter shareholders are suing the social media company following a whistleblower complaint and public testimony from former chief information security officer Peiter \u201cMudge\u201d Zatko. (Photo by Bethany Clarke\/Getty Images)<\/figcaption><\/figure>\n<\/div>\n

Shareholders are suing Twitter following a whistleblower complaint and public testimony from former chief information security officer Peiter \u201cMudge\u201d Zatko, claiming the company deceived investors in public disclosures about the state of their security.<\/p>\n

The lawsuit, filed Sept. 13, the same day<\/a> Zatko testified about the security problems in front of the Senate Judiciary Committee, names Twitter along with former chief executive officer Jack Dorsey, current CEO Parag Agrawal and chief financial officer Ned Segal as defendants.<\/p>\n

According to the complaint<\/a>, the shareholders argue that Twitter knew its security practices were deficient, putting user and advertiser information at risk and cite filings to the Securities and Exchange Commission between 2020 and 2022 that note \u201csecurity incidents \u2026 may expose us to a risk of loss of this information, litigation, increased security costs and potential liability.\u201d<\/p>\n

 Such a breach \u2014 whether actual or perceived \u2014 could have a negative impact on the market\u2019s perception of the company\u2019s security posture, harm users and advertisers and decrease trust in the overall product.<\/p>\n

\u201cTwitter knew about security concerns on their platform; Twitter actively worked to hide the security concerns from the board, the investing public, and regulators; contrary to representations in SEC filings, Twitter did not take steps to improve security; Twitter\u2019s active refusal to address security issues increased the risk of loss of public goodwill; and as a result, Defendants\u2019 statements about Twitter\u2019s business, operations, and prospects, were materially false and misleading and\/or lacked a reasonable basis at all relevant times,\u201d the complaint states.<\/p>\n

The bulk of the evidence put forth by the plaintiffs are drawn from Zatko\u2019s whistleblower complaint, which alleged that Twitter\u2019s leadership misled its own board about security vulnerabilities, could not locate much of the data they collected and stored around users and, as a result, needed to provide broad administrative access to software engineers and developers.<\/p>\n

That left that data exposed to phishing and other credential-based attacks, like the kind that took place in 2020 when teenage hackers were able to hijack an administrative account and take control of high-profile Twitter accounts to advertise a cryptocurrency scam. Zakto also said that the company\u2019s lack of data center redundancy put it at risk of disruptions and shutdowns.<\/p>\n

The day Zatko\u2019s complaint was made public<\/a>, Twitter\u2019s stock price dropped by 7%.<\/p>\n

Further, the shareholders claim that prior to Zatko\u2019s disclosures, Twitter should have already been on notice that its security practices were going to be under scrutiny due to a 2011 consent decree with the Federal Trade Commission that required it to put a robust information security program around non-public user information and required the company to undergo biennial security audits.<\/p>\n

\u201cAs a result of Defendants\u2019 wrongful acts and omissions, and the precipitous decline in the market value of the Company\u2019s common shares, Plaintiff and other Class members have suffered significant losses and damages,\u201d the complaint states.<\/p>\n

The core argument by the plaintiffs \u2014 that Twitter\u2019s public statements to the SEC and investors demonstrate that they knew a deficient security would be bad for business and led to shareholders paying for artificially inflated stock prices \u2014 is similar to what SolarWinds shareholders have claimed<\/a> in their own lawsuit following the Orion breach.<\/p>\n

Earlier this year, a judge declined a request<\/a> by SolarWinds and its private equity owners to dismiss the suit, saying shareholders had sufficiently demonstrated that CISO Tim Brown and the company acted with \u201cat least, severe recklessness\u201d when touting the company\u2019s security environment in media interviews and public filings.<\/p>\n

Tyson Benson, an attorney with ZF Group, told SC Media that based on the complaint, the shareholders appear to be arguing that even as Twitter hired Zatko as CISO and were receiving new insights into the porous state of its cybersecurity, the language in SEC disclosures remained the same, using language this year that was identical to previous years\u2019 filings.<\/p>\n

One chief difference between this and the SolarWinds lawsuit: whereas SolarWinds argued that there was no proof that previous warnings about security holes made by a consultant prior to the Orion breach made it up to the CEO and other leadership, Zatko was Twitter\u2019s chief security official and his complaint makes it clear his concerns were relayed to the highest levels of the company.<\/p>\n

\u201cWhat has happened is because of the Zatko congressional hearing \u2014 it put a spotlight on \u2026 all of these filings and what the plaintiffs are alleging is, \u2018Hey, none of this information found its way into these reportings that are required from SEC \u2014 and so because of this active neglect or behavior \u2026 that consumers and stock investors were not properly being brought up to date on the actual security environment at Twitter,\u2019\u201d said Benson.  <\/p>\n

The 2011 consent decree with the FTC may add to that argument and help \u201cset the stage\u201d for shareholders to demonstrate previous bad security, but ultimately Benson said the Twitter lawsuit will need to clear a similar bar, proving that company officials were aware that shortcomings listed in the whistleblower complaint made their previous SEC disclosures inaccurate and that they intended to deceive the government and public with identical statements this year.<\/p>\n

\u201cWhat the plaintiffs would be saying is at each time they\u2019re re-using the same statement, and even after Mudge came forward, nothing has changed in this statement,\u201d said Benson.<\/p>\n

READ MORE HERE<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

READ MORE HERE…<\/p>\n","protected":false},"author":2,"featured_media":48522,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_layout":"default_layout","footnotes":""},"categories":[277],"tags":[10203],"class_list":["post-48521","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cybersecurity-blogs","tag-headlinehackergovernmentprivacydata-losscyberwarspywaretwitter"],"yoast_head":"\nShareholders File Suit Against Twitter Following Former CISO's Warnings 2026 | ThreatsHub Cybersecurity News<\/title>\n<meta name=\"description\" content=\"ThreatsHub Cybersecurity News | ThreatsHub.org | Cloud Security & Cyber Threats Analysis Hub. 100% Free OSINT Threat Intelligent and Cybersecurity News.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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