SEC Accuses First American Mortgage Title Issuer Of Violating Cybersecurity Vulnerability

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The SEC on Tuesday announced it had reached a settlement with one of the largest US mortgage companies over cybersecurity vulnerabilities. (iStock)

Securities and Exchange Commission (SEC) on Tuesday announced settled charges against First American Financial Corp., one of the largest mortgage rights and settlement services companies in the United States, on charges of cybersecurity breaches when the company disclosed its clients’ confidential personal information and failed to respond appropriately to incidents when informing clients of the leak.

The SEC order in this regard notes that a cybersecurity journalist notified First American of a data protection vulnerability on the morning of May 24, 2019, in which more than 800 million images were found, dating back nearly two decades. The images in the data breach contained sensitive personal information such as social security numbers.

First American currently controls 21.07% of the mortgage title company market, second only to Fidelity National Financial, which owns 32.24% of the market. It is one of the four mortgage companies that control nearly all mortgage transactions.

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First American issued a statement in response to the leak on the same day the company was notified, but according to the SEC, that was not enough for a response plan. The agency’s order stated that senior management at the company had not been informed that their cyber security officers had identified the leak months earlier, had not fixed the problem, had not developed a response plan, or had reported it to anyone. The Securities and Exchange Commission said this ineffective response to the cyber incident puts personal information at risk.

This cybersecurity breach occurred shortly before the title companies saw burst of new business in 2020 due to unprecedented growth in mortgage lending activity, according to the American Land Rights Association (ALTA). The title insurance industry generated a total of $ 19.2 billion in premiums during 2020, up from $ 15.8 billion in 2019. The first American received just under $ 4.5 billion of that amount.

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“As a result of First American’s lack of oversight of disclosure, senior management was completely unaware of this vulnerability and that the company was unable to fix it,” said Christina Littman, head of the SEC’s Cyber ​​Enforcement Division. “Issuers must ensure that information important to investors is passed up the corporate ladder to those responsible for disclosing information.”

According to a SEC press release, the order accused First American of violating rule 13a-15 (a) of the Exchange Act when it failed to protect personal information and its risk management plan failed to adequately inform users of the extent of the data breach. The company did not acknowledge or deny the SEC’s findings, but agreed to a cease-and-desist order and a $ 487,616 fine.

“We are pleased to resolve this issue with the SEC and remain committed to meeting all SEC disclosure control requirements,” First American said in a statement.

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Data security threats in general are on the rise. BUT Recent report on data security from Verizon shows that the number of phishing attacks in 2021 increased by 11% annually, and the number of ransomware attacks increased by 6%.

Adhering to security measures raises cybersecurity awareness and is important in deterring cyber intruders, protecting your personal information and identity, and ensuring that your credit is not damaged. Having a data protection detection system can ensure that you first see your identity theft outside of the time you apply for a credit card. To ensure that your personal information is safe, use credit monitoring service which can alert you to potential cybersecurity threats.

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