Nasdaq Hacking a Wake-Up Call for Boards

Don't you find it somewhat ironic that the one part of Nasdaq's website hackers were able to break into was the Directors Desk portal, an online application that allows directors to share confidential information about their boards and corporate governance? It's almost as if the hackers were sending a message to one of the world's largest online equity markets: "we know boards don't understand IT governance and security risks; so we'll show you how vulnerable you are."

That's not the way the story is playing in business publications and online. Many news reports [Wall Street Journal and New York Times] are saying law enforcement officials (including the FBI, Secret Service and the SEC) believe the motive behind the weekend hacking was that the perpetrators were trying to get non-public inside information to gain a trading advantage. After the Wall Street Journal broke the story Friday, it became clear Nasdaq had been dealing with this issue for more than a year and that it could indicate a broader attack on other U.S. market exchange websites.For an exchange whose business model relies on a complex network of computers, Nasdaq OMX (the exchange's official name) decided to act quickly when it found out. It has reiterated that information technology security is priority No. 1 in today's fast-pace technology-driven world.

Check out the statement the company issued soon after the Wall Street Journal ran. If you look closely, you will notice it made the point of saying the trading side of the website was not breached. Unfortunately for Nasdaq, the Directors Desk portal itself touted its "highest level of security available to protect confidential board communications."

Read the rest of this article on the Corporate Governance Blog, a blog by Gary Larkin

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