Yahoo general counsel resigns amid data breach controversy


Yahoo general counsel Ron Bell is leaving the tech giant after an investigation of the company revealed that its legal team failed to sufficiently inquire into a massive 2014 cybersecurity breach.

According to a 1 March filing with the US Securities and Exchange Commission (SEC), Bell “resigned as the company’s general counsel and secretary and from all other positions with the company”, effective Wednesday (1 March). The filing said that “no payments are being made to Mr Bell in connection with his resignation.”

In addition to announcing Bell’s departure, the filing revealed the results of an investigation by an independent committee of Yahoo’s board of directors, with assistance from US law firm Sidley Austin, into a 2014 hack of the company’s networks that impacted at least 500 million customer email accounts.

Yahoo, which did not immediately respond to request for comment on Bell’s departure, explained in the filing that certain senior executives at Yahoo as well as members of its legal team “had sufficient information to warrant substantial further inquiry in 2014” about a hack by a state-sponsored actor into the company’s networks, but “they did not sufficiently pursue it”.

“As a result, the 2014 security incident was not properly investigated and analysed at the time and the company was not adequately advised with respect to the legal and business risks associated with the 2014 security incident,” the filing said. “The Independent Committee found that failures in communication, management, inquiry and internal reporting contributed to the lack of proper comprehension and handling of the 2014 security incident.”

The company did not disclose the 2014 data breach to the public until September 2016. Then, in December 2016, the company admitted that it had suffered yet another breach in 2013, which had affected more than one billion user accounts.

Aside from raising questions about the company’s security and disclosure practices, the delayed public disclosure of the two massive breaches has at times led to speculation that Verizon’s acquisition of Yahoo’s operating business may be in jeopardy.

A 21 February SEC filing from Verizon, however, revealed that the deal is moving forward, though the price has been reduced by $350m (£285m), from approximately $4.83bn (£3.93bn) in cash to roughly $4.48bn (£3.65bn).

At least nine US law firms advised on the deal, including Skadden Arps Slate Meagher & Flom, Wilson Sonsini Goodrich & Rosati and Weil Gotshal & Manges for Yahoo, with Wachtell Lipton Rosen & Katz, Gibson Dunn & Crutcher, Covington & Burling and Winston & Strawn acting for Verizon.