The 2014 breach blamed on Russian hackers affected hundreds of millions of Yahoo accounts, with stolen "crown jewel" data including usernames, email addresses, phone numbers, birthdates, encrypted passwords, and security questions, according to the Securities and Exchange Commission.
The SEC order also found that Yahoo failed to have procedures in place to deal with such a breach or the threat of future hacks, as well as how to disclose such incidents in a timely and proper fashion.
Yahoo! should have let investors know about the massive breach in its quarterly and annual reports because of the huge business and legal implications to its business, the SEC said.
Altaba, as the company is now called, agreed to the fine without admitting or denying any wrongdoing.
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Hackers broke into half a billion Yahoo accounts in late 2014, the company acknowledged on Thursday.
Steven Peikin, co-director the SEC's enforcement division, said cyber breaches were a priority for the agency and hoped companies facing similar issues would take note.
The SEC did not announce any charges against executives at Yahoo.
Prosecutors said Tuesday that two Russian intelligence agents, Dokuchaev and Igor Sushchin, used information they stole from Yahoo to spy on Russian journalists, US and Russian government officials, and employees of financial services and other private businesses.
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Yahoo has since changed the company's name to Altaba. "But we have also cautioned that a company's response to such an event could be so lacking that an enforcement action would be warranted".
"Yahoo's failure to have controls and procedures in place to assess its cyber-disclosure obligations ended up leaving its investors totally in the dark about a massive data breach", said Jina Choi of the SEC.
The investigation into Yahoo is continuing and the SEC has yet to make a decision about the role or culpability of individuals, the SEC said.
Cyber breach disclosures have drawn intense scrutiny after credit reporting agency Equifax Inc announced previous year that personal information on almost 150 million Americans had been compromised.
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