The Securities and Exchange Commission (SEC) has admitted that it was the victim of a cyberattack in 2016 that exposed information that may have been used for insider trading. The hack involved the SEC’s filing database, known as EDGAR. The admission was on the heels of a Government and Accountability Office report in July that warned the SEC that it had not fully implemented an intrusion detection capability in its system.

This is rather embarrassing of a regulator that is overseeing the data security of investment firms that it regulates. Many of those companies are whispering behind the SEC’s back that now they know how it feels to try to stay ahead of sophisticated hackers.

The conundrum is that companies are required to provide sensitive information to governmental entities, yet those entities may not have sufficient data security measures in place to protect the information. Companies have invested resources into development of vendor management programs to evaluate the security measures of vendors which have access to high risk vendors, but the government is usually not subjected to these auditing requirements. Perhaps this incident is one that provides a basis for including governmental entities into a vendor management and audit program.