News
SEC Approves Using Facebook, Twitter for Company Disclosures
PDF Print E-mail

U.S. companies will now be able to post their earnings on Twitter or update their status on Facebook as long as investors have been told in advance where to look.

The U.S. Securities and Exchange Commission issued guidance yesterday permitting companies to use social media sites including Facebook Inc. (FB) and Twitter Inc. to communicate company announcements. The guidance came as part of a report detailing its investigation into Netflix Inc. (NFLX) Chief Executive Officer Reed Hastings, who in July posted monthly viewership results on his Facebook page rather than in an SEC filing or news release.

The SEC refrained from bringing an enforcement action against Hastings or Netflix, which runs a subscription service for watching television programs and movies, because rules around using social media for company disclosures had been unclear, the agency said.

“Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news,” George Canellos, acting director of the SEC’s enforcement division, said in a statement.

The SEC confirmed that a regulation prohibiting companies from disclosing material information to select investors applies to social media and other emerging means of communication the same way it applies to company websites. Company communications made through social media channels could constitute a violation of the fair disclosure rule known as Regulation FD if investors had not been told in advance where the information would be posted, the SEC said.

‘A Good Thing’

Social media “has tremendous potential to level the playing field for participants in the markets,” said Stephen Diamond, a securities law professor at Santa Clara University’s School of Law. The report “shows a commission that’s being flexible and responsive, and it shows a government agency that actually thinks innovation is a good thing.”

Some investor advocates are less sanguine about the policy change. Lynn Turner, a former chief accountant at the SEC, called it “bad policy” because it will disadvantage investors who don’t use Facebook and Twitter.

‘Dumber’ Idea

“Many investors, especially those over 50, who in the aggregate have the most invested, still do not use social media,” Turner said in an e-mail. “Telling someone who does not use Twitter to go to Twitter for significant investment information is one of the dumber ideas I have heard.”

Jim Prosser, a spokesman for San Francisco-based Twitter, declined to comment.

“We welcome, and certainly agree with, the SEC’s finding that Facebook is an established means for companies and individuals to share and disseminate information broadly,” Menlo Park, California-based Facebook said in a statement.

While the agency didn’t explain exactly how a company should inform investors about social media use, the new guidance will give companies greater comfort in communicating with investors via Facebook and Twitter, said David Katz, a partner at law firm Wachtell, Lipton, Rosen & Katz.

“Do I see it as a sea change? No,” Katz said in a telephone interview. “But investor relations has moved into the 21st century and the SEC has caught up.”

Facebook Post

Hastings stirred controversy over SEC disclosure guidelines when he wrote in a July 3 post on Facebook’s website that viewing on Netflix’s video-streaming service had “exceeded 1 billion hours for the first time” in June. The incident led to calls for the SEC to broaden its rules to allow social media to be used to communicate to investors.

In December, Hastings and Netflix each received a Wells Notice, indicating SEC staff intended to pursue enforcement action in the matter. That same month, Hastings said that posting to his Facebook contingent of 200,000 followers “is very public.”

Netflix said it welcomed the SEC’s guidance. “We appreciate the SEC’s careful consideration and resolution of this matter,” spokesman Joris Evers said in a statement.

Gene Goldman, a partner at law firm McDermott Will & Emery LLP, said the report provides companies a road map for staying out of trouble.

“But the next time material information is disclosed on an executive’s Facebook page without the company alerting all shareholders to look there for information, the matter will likely be met with an SEC lawsuit instead of a report,” Goldman said.

 
Millions May Be Affected by Web Disruption in Online Attack
PDF Print E-mail

Millions of people may have been affected by an attack that caused disruption and a slowdown of the Internet, according to a not-for-profit anti-spam organization that blacklisted a Dutch Web-hosting company.

The interruptions came after Spamhaus, a spam-fighting group based in Geneva, temporarily added CyberBunker to a blacklist that is used by e-mail providers to weed out spam. The attacks work by trying to make a network unavailable to its intended users by overloading a server with coordinated requests to access it, according to security firm Kaspersky Lab.

Calling the disruptions “one of the largest computer attacks on the Internet,” the New York Times reported today that millions of Web users have experienced delays in services such as Netflix video-streaming service or couldn’t reach a certain website for a short time.

Special Report: Cybersecurity in the Cloud

“The size of the attack hurt some very large networks and Internet exchange points such as the London Internet Exchange,” John Reid, a spokesman for Spamhaus, said in an e-mailed response to questions by Bloomberg News. “It could be thousands, it could be millions. Due to our global infrastructure, the attackers target places all over the world.”

Spamhaus was targeted with a so-called distributed denial of service attack on the evening of March 15, Reid said.

Dutch Bunker

The attackers pretended to be Spamhaus and bombarded the Internet’s Domain Name System with simultaneous requests for information, according to Michael Sutton, vice president of security research for Zscaler. The System thinks the requests are from Spamhaus and sends them back to its website, creating a wall of data so large that the site crashes, he said.

“This attack isn’t new but I’ve never seen it abused to this scale,” he said in an interview. A traditional denial-of- service attack floods a website with tens of thousands of requests a second, causing it to temporarily shut down.

CyberBunker, which was founded 1998 and is based in a military bunker near a Dutch town called Goes, offers Web- hosting services for all sites except child pornography and anything related to terrorism, according to its portal.

“The only thing we would like to say is that we do not, and never have, sent any spam,” Cyberbunker spokesman Jordan Robson said in an e-mail.

Such attacks are growing in quantity as well as scale, according to Vitaly Kamluk, chief malware expert of Kaspersky Lab’s global research and analysis team. The two main motives for the disruptions are money through cybercrime and political and social activism, he said.

“This is indeed the largest known DDoS operation,” Kamluk said by e-mail. “Such DDoS attack may affect regular users as well, with network slowdown or total unavailability of certain web resources as typical symptoms.”

 
Apple Buys Indoor Location-Services Startup WiFiSLAM
PDF Print E-mail

Apple Inc. (AAPL), whose mapping software has been criticized for misguided directions and inaccurate landmark, bought startup WiFiSLAM to add location-identifying technology for when a user is inside a building.

“Apple acquires smaller technology companies from time to time, and we generally do not discuss our purpose or plans,” said Steve Dowling, a spokesman for Apple, confirming the deal.

The purchase is among several Apple has made in recent years to improve its navigation capabilities as it competes with Google Inc. Last year, Cupertino, California-based Apple introduced its own mapping software to replace Google’s, a switch that resulted in user complaints and negative reviews. Apple Chief Executive Officer Tim Cook apologized and vowed to improve the service.

WiFiSLAM, based in Palo Alto, California, is part of a group of companies helping users find a location when they are inside a building like a grocery store or shopping mall. Google also has been creating maps for indoor locations like museums.

 
Apple Says Data Centers Now Use 100% Renewable Energy
PDF Print E-mail

Apple Inc. (AAPL) now uses only renewable energy sources to power its data centers, the iPhone maker said in an updated report on its environmental policies.

The company’s data centers now run on energy sources such as solar, wind and geothermal, instead of coal or other fossil fuels, Apple said on its website. The centers house server computers that store and distribute songs, applications and other content from services such as iTunes, iMessage and iCloud.

A year ago, Apple was targeted by Greenpeace International, which ranked Apple 12th out of 14 large technology companies in a report called “How Clean Is Your Cloud?” The environmental group, which held protests at Apple’s offices in Cupertino, California, charged Apple with relying on electricity from coal plants and gave Apple a grade of no better than D in the four categories it tracked.

In its environmental update, Apple said a 100-acre solar farm next to its largest data center, in Maiden, North Carolina, became fully operational in December. With the solar array and a large installation of fuel cells, which convert biogases into energy, Apple said it met a goal of generating 60 percent of the energy for the data center on-site.

The company said a data center that is under construction in Prineville, Oregon, will also run on local renewable energy sources such as wind, hydro, solar and geothermal power.

 
Cybersecurity Lobby Surges as Congress Considers New Laws
PDF Print E-mail

The determination by Congress and President Barack Obama’s administration to protect networks of critical U.S. industries from hackers and cyberspies is creating an explosive growth opportunity -- for lobbyists.

There were 513 filings by consultants and companies to press Congress on cybersecurity by the end of 2012, up 85 percent from 2011 and almost three times as many as in 2010, according to U.S. Senate filings. Twelve firms have submitted new registrations this year on behalf of companies including Google Inc. (GOOG)’s Motorola Mobility unit, Symantec Corp. (SYMC), United Parcel Service Inc. (UPS) and Ericsson Inc., the U.S. subsidiary of Stockholm-based Telefonaktiebolaget LM Ericsson.

“Cybersecurity is a lobbyist’s dream,” Rogan Kersh, provost at Wake Forest University in Winston-Salem, North Carolina, who researches political influence, said in an interview.

Washington’s plan to fight attacks had Raytheon Co. and Lockheed Martin Corp., which want to sell security products, lobbying on cyber bills and appropriations. Sectors targeted by hackers, such as banking and energy, have their trade groups pushing for liability protection for sharing threat information. Verizon Communications Inc. told lawmakers it wants “greater cybersecurity without technology mandates or prescriptive rules.”

Companies want to discuss issues including what kind of impact government-issued security practices will have on corporate supply chains, said Avivah Litan, Washington-based cybersecurity analyst at technology research firm Gartner Inc.

“This is going to be a titanic clash, and when that kind of industry power is aligned against each other, lobbyists start sharpening their knives and forks,” Kersh said.

Executive Order

The interest in influencing cybersecurity policy tracks more urgent warnings by the administration and Congress that more action is needed to stop Chinese online espionage and potential digital sabotage of vital infrastructure such as power grids.

Obama issued an executive order in February directing the government to develop voluntary cyber standards for privately- held assets considered critical to national security, and to increase sharing of cyber attack information with companies.

Companies “used to think they could ignore this issue or sweep it under the rug,” Mark Warner, a Virginia Democrat who sits on the Senate Commerce and Intelligence committees, both of which have considered cyber bills, said in an interview.

Mandiant Report

A Feb. 19 report from security firm Mandiant Corp., concluding the Chinese army may be behind a hacking group that has hit at least 141 companies worldwide since 2006, has altered the debate, Warner said.

“There’s more and more recognition, industry by industry, that the sheer volume of threats can’t be hidden anymore,” he said.

The Department of Homeland Security will identify industries subject to the executive order. While standards are to be voluntary, the order instructs U.S. agencies to consider making them regulations for critical industries they oversee.

“We want to be prepared to weigh in and help guide or inform those processes as appropriate,” Ladeene Freimuth, a lobbyist for the GridWise Alliance, a Washington-based group representing electric utilities including Pepco Holdings Inc. and Duke Energy Corp., said in an interview.

The alliance, which first registered to lobby on cybersecurity March 2, supports a proposal by House Intelligence Committee Chairman Mike Rogers, a Michigan Republican, giving liability protection to companies that share threat information, Freimuth said. The group favors “flexible” regulation that doesn’t duplicate existing standards, she said.

Lawsuit Protection

The White House is urging Congress to pass legislation to fill in gaps it couldn’t address in the executive order. Lawmakers, who failed to pass a cyber bill last year amid disagreements over the role of government and privacy protections for consumer data, have returned to the topic in recent weeks with hearings and new proposals in the House.

Banks, telecommunications companies and energy companies, which have been targeted for attacks, are pushing for better sharing of threat and attack details from government. They also want to be protected from privacy lawsuits if they share information on customers, and from negligence suits for failing to act on warnings.

Retailers, Railroads

The National Retail Federation lobbied the Senate on its “Cybersecurity Act of 2012,” as did 3M Co., which also discussed the bill with Homeland Security and the Justice Department, according to Senate filings.

The Association of American Railroads lobbied on Rogers’ Cyber Intelligence Sharing and Protection Act, which passed a floor vote in the House last year and has been reintroduced this session, records show. The National Cable and Telecommunications Association, meanwhile, lobbied on bills in Congress while also discussing the formation of the White House cyber executive order with DHS, the group’s filings said.

Senate Commerce Committee Chairman Jay Rockefeller, a West Virginia Democrat, in September asked all Fortune 500 chief executive officers about their companies’ cybersecurity practices and their views on the federal government’s role in improving computer defenses.

That made companies realize cybersecurity would gain a higher profile in Washington, said Jessica Herrera-Flanigan, a partner at Monument Policy Group, a lobbying firm representing Boeing Co. (BA), Microsoft Corp., and LinkedIn Corp. (LNKD)

“Companies are realizing that it’s important to engage with Congress and with the administration to ensure they have input on the development of laws, rules and regulations that affect them,” said Herrera-Flanigan, a former staff director for the House Homeland Security Committee.

Lobbyist Roster

Among those registered to lobby on the issue for Ericsson are Rhod Shaw, former chief of staff to Senator Sherrod Brown, an Ohio Democrat; Jared Weaver, former deputy chief of staff to Representative Anna Eshoo, a California Democrat; and Ansley Erdel, who formerly worked for Georgia Republican Nathan Deal.

Lobbyists for Google’s Motorola Mobility unit include Elizabeth Frazee, former counsel for Representative Bob Goodlatte, a Virginia Republican who became chairman of the House Judiciary Committee this year.

The UPS lobbying team on cyber includes Jeff Forbes, former staff director of the Senate Finance Committee and chief of staff to the panel chairman, Max Baucus, a Montana Democrat.

Spokesmen Jimmy Duvall of Ericsson and Cris Paden of Symantec didn’t respond to requests for comment. A UPS spokeswoman, Kara Ross, declined to comment, as did William Moss, a spokesman for Motorola Mobility.

“The new frontier is cyberwar in terms of our national defense,” Gartner’s Litan said. “I’m not surprised the lobbyists are ramping up.”

 
Page 1 of 22