Wednesday, July 19, 2017

Senior Enterprise Architect Wanted - I think this is in the Washington DC area

(Please forgive the grey shading, this is what I got from the recruiter)

For further info, please call:
Gregory Price
Vice President of Defense Programs
Trowbridge & Trowbridge, LLC

Cell: 815.531.9667
1430 Spring Hill Road, Suite 200, McLean, VA  22102 |  |  O: 571-298-8478 | F: 571-499-4153

= = = = =
Senior Enterprise Architect 

Work Experience, min 12 years:
5+ years primary role operating, troubleshooting, installing network routers and switches
5+ years primary role designing, architecting routed and switched networks
2+ years as senior or lead network architect in multi-tenant network
2+ years as senior or lead network architect in planning, designing, and building software defined networks 3+ years DoD environment

At least two nationally recognized certifications for senior network administrators/engineers/architects, and one of these certifications must be tied to the proposed solution’s routers and switches.
IAT Level III in accordance with DoD 8570.01-M
Bachelor’s degree in Information Systems, Engineering or Equivalent; Master’s degree preferred
Demonstrated Skills:
Ability to analyze requirements; plan and develop technical solutions and frameworks; develop test and implementation plans, analyze and evaluate networks,
Use of current and emergent network design principles and protocols
Experience with network virtualization technologies and vendors
Experience with multi-tenant network architectures
Experience with specific designing and modernize a complex network to separate control from data planes. Familiarity with a width variety network routing and switching equipment devices from multiple vendors Scripting languages such as Pearl, Python.

Awareness of DoD JIE-JRSS architecture, and design experience for a DoD network within the last 3 years.
Active or current Top Secret clearance, SCI eligible, adjudicated through DoD Central Adjudicative Facility (CAF).
67 of 79 SDN Solution Final PWS v1.0 As Of: 23May17_1700hours 

Friday, July 14, 2017

Cybersecurity research: What and How

Friday July 7, 2017, I was asked by the folks at SANS.EDU to help the graduate students submit research proposals to be evaluated by the STI research committee. It was fun work, and a glimpse at a new, (to me), part of the research process at STI.

In the first batch there were a number of potentially great proposals, but only one student took the time to clearly articulate what she was going to do and how she was going to do it. Not surprisingly, when this proposal reached the committee for a go/no go decision, the answer was go, (approved), and several faculty members volunteered to be the advisor on the project.

The experience led me to wonder, "what is the difference between the successful project proposals and the ones we evaluate as not yet ready?" From the title of the blog post you can probably guess the answer is the successful students clearly articulate what they are going to do and how they are going to do it. Before we examine that, let's take a minute to define a Cybersecurity Research Proposal. There are, amazingly, three key words to consider:

    Cybersecurity: all of the proposals fell into the realm of computer security, so we don't need to belabor this point. We can leave Better methods of picking daisies to some other worthy institution.

    Research: we ran into some problems here.  Research is studious inquiry. Research is not regurgitation of already published information, or an opportunity to recount one's personal experience.

    Proposal: this is where the student defines what they are going to do and how they are going to do it.

As mentioned, most of the proposals had potential in the sense that the topics were timely and interesting. So where did so many miss the mark?  There seemed to be two major pitfalls, overly broad topics, (failure to succinctly define "what") and research process that cannot be practically accomplished, (failure to pragmatically understand/define how).

Since it is frustrating to be sent "back to the drawing board", here are a couple suggestions for success the first time through the process.

1) Know what you want to do. Ideally, your topic will be something that you want to learn more about, or that will benefit your employer. In the best of all possible worlds your topic will satisfy both conditions. If you do not know what you want to do, you will not be able to explain it in the proposal. That results in "fuzzy writing" which ends up frustrating all parties, student and advisor. Only you can know what you want to do.

2) Use the literature search part of the process to explore the uniqueness of your proposal. If there are lots of papers, tutorials, YouTube videos, etc on "Using Wireshark to monitor the TCP/IP 3 Way Handshake", it could be an indication that ground has already been covered. However, keep in mind that just about everything you can imagine has been published on the Internet in one form or fashion. The published material may not be supported by studious inquiry and/or empirical results. In that case, you may still have a valid topic and this is a discussion you should have with your advisor.

Summary: if your research proposal: reflects studious inquiry, covers new ground and adds to the body of knowledge, clearly explains what you intend to do and how you intend to do it, then the odds are better than average it will be accepted the first time.

Wednesday, June 7, 2017

Guy Bruneau Commendation

No one can remember a time when this was issued to a civilian, (maybe Guy has a uniform stashed away in a closet somewhere, eh).

Friday, June 2, 2017

What Are Your Data Protection Best Practices? Please take our SANS Survey

From Deb Radcliff

For years, cradle-to-grave data protection has been a pipe dream, but today it’s even more important because data moves into and out of the cloud, onto mobile devices and elsewhere outside the perimeter. That’s why SANS is now conducting its first survey on Data Protection Best Practices and we’re asking for you to take the survey and share your experience and knowledge.

In the survey, we want to find out who holds responsibility for data security, what type of sensitive data (and associated regulations) organizations are handling, and how well their security programs keep up with agile development, DevOps, containerization and other contemporary development methodologies.

Results and advice will be shared in a SANS community whitepaper developed by SANS Analyst Program research director, Barb Filkins, who specializes in healthcare and data privacy laws. The paper will be provided to the community during a live webcast and also presented at the SANS Data Breach Summit in September. 

The goal is to get the dialog moving on cradle-to-grave data protection, identify weak links, improve data protection practices, and raise awareness at the highest levels of the organization.

“From a legal and regulatory viewpoint, management is very often the responsible party for setting policy around the protection, privacy and security of data held by the organization,” says Filkins. “Yet they are often unaware of the risks involved in protecting the actual data and information. The results of this survey will help managers and their IT staffs identify and remediate these risks.”

We call upon your experiences: Please take the survey (and in the process you may also enter to win a $400 Amazon Gift Card OR a free pass to the SANS Data Breach Summit). Survey will be removed June 26.

Tuesday, May 30, 2017

Improving phishing detection methods

We all know detecting things we do not know exist such as a zero day attack is hard if not downright impossible. However, that does not mean that the occasional joust at a windmill is off the table.

Early this morning, (my time), a member of the GIAC Advisory Board, Kevin Holleran posted a comment that maybe if we could categorize types of phishing that would give us some traction. His original list was:

- Call to Action from a Position of Trust (i.e. CEO Fraud)
- Offers / Products
- Trusted Services (masquerading as Dropbox, Office, etc.)
- Targeted / Spear
- Spoofed Insider
- Credential Harvesting

- Simple (sentence) vs. Complex (HTML)

If you have suggestions on:
- Additional categories
- Keywords or phrases to identify those categories

Please add them to the comments field on this post or the Linkedin announcement. I realize there are a number of scholarly papers on automated phishing detection and over the weekend I will pour through a few, but I am interested in ideas from the people in the trenches. 

Before you say, "that will never work". Let me remind us of a similar field, in fact, I should check they may have already solved this and that is SPAM in general.

A long time ago, my employer, SANS, was a LAMP shop. Our SPAM tool was Spam Assassin. Yes, it had to be configured weekly and yes, there were leakers, (SPAM that got through the filter). As the company grew, they started looking a commercial software and suggested Barracuda. People loved it. SPAM never bothered me, I just deleted it, but the improved solution meant a lot to a lot of people. Here are a few words from Barracuda on how they did it: 

A message "is scored for spam probability. This score ranges from 0 (definitely not spam) to 10 or higher (definitely spam). Based on this score, the Barracuda Email Security Gateway either tags (inbound messages only), quarantines, blocks or allows (or sends, for outbound) the message."

Kevin, Lance and I would love your ideas please post them in a comment field, the occasional snarky remark is fine as well, but go for humor. I used Kevin's ideas with permission:
Absolutely, I am very interested in feedback from the community.

I also agree with Lance's assessment as far as the focus on training, but I believe there is considerable value in being able to focus on realizable threats to a specific organization.  We are not going to be able to get 100% coverage of every threat out there in our programs, so let's work to drive the most value.


Kevin Holleran
Master of Science, Computer Information Systems
Grand Valley State University
Master of Business Administration
Western Michigan University

"Do today what others won't, do tomorrow what others can't" - Smokejumpers Creed

Tuesday, May 23, 2017

Where are all these people coming from, (cybersecurity experts)?

In 1997 I knew about half the packet ninjas in the world and if I needed an insight from someone I did not know I could get an introduction. As the security world grew and my focus started to change to general cybersecurity, I was able to track the majority of the folks with the time, talent, knowledge and name recognition to be a SANS Instructor. I even managed to keep up with things for a while as we started to break into disciplines, forensics, pen-testing etc.

I joined Linkedin in 2007 and soon worked my way up to about 200 connections. Fast forward 10 years and it is 11,337 according to the website. Do I actually know 11k people? I don't think so. When I read about conferences other than SANS, it is common for me to not recognize a single name. But if I look them up on Linkedin or some other source they are all world renowned experts in whatever cybersecurity field grabs their fancy.

One of the few things from my Virginia Tech Artificial Intelligence class in 1997, that is still with me, "The problem with expert systems is there aren't many actual experts to build them". Exactly.

Trying to keep up in this field is hard. You post a few packet decodes, marvel at some of the Wannacry decodes, even build a chatbot in case that is the new, new thing. But nobody on this planet is going to stay current in all the cyber disciplines.

Which brings us to the core issue of this post. How do you tell real balanced news from biased news from "fake news". It is a very hard problem. How can you identify a competent doctor from an incompetent one? Thank heavens it was a minor problem, but I visited three podiatrists in a row that did not appear to know a foot is the thing inside of a shoe. How can you tell a competent cybersecurity practitioner from the "fake news" version. Let me illustrate with a simple example. When Wannacry came out, everyone that was switched on was sharing information and had a pretty good idea of how it worked and what was vulnerable. Three days later you started seeing every security vendor posting a webcast, document, you name it. And the titles, some were straight out of the marketing department.

We have some tools to separate the cybersecurity wheat from the chaff. There are respected certifications, look for specifics on resumes like tools, publications and presentations certainly help. But it is tricky. Anyone that has been in the field for a while has had the unpleasant experience of interviewing someone for a job that sounded great and after onboarding couldn't even find the bathroom. I thank the Lord the first one of those I experienced happened three weeks after I took on a management role; I have been gun-shy ever since. I have also found some of the MSSP sales presentations to be jaw droppers. This is another case of being lucky over smart, one of my friends was director of operations for one of the first MSSPs. The would literally take people off the street, (with aptitude), give them three weeks training and shop them as experts.

To summarize. Not everyone in cybersecurity that claims to be an expert actually is, but hey, you already knew that. You also know one are more people in the field that have expertise, (at least in some aspect of security). Hang on to those connections, stay in touch, once or twice a year is plenty. Then, when you need information, use a validated source. You are going to pay either way, might as well get something useful for your money.

Saturday, May 13, 2017

Honeypots and the French election

NOTE: this post is primarily a reprint of other sources. I credit them of course. I just wanted to get the information in one place for quick reference. The main points that cannot be reasonable disputed are:
- There was some sort of attack on the Macron presidential election campaign targeting email and documents.
- The tech savvy Macron folks had prepared in advance with a honeypot strategy that was at least partially effective
- Many indicators are Russian in nature with Fancy Bear/APT28 at the top of the list, however, Forbes was wise to bring attribution into question. I have worked on attribution in one manner or another for fifteen years and there is a real risk of drawing an incorrect conclusion.

An article published by Ars Technica describes the Russian attempt to influence the French presidential election. "The failed effort by Russian attackers to influence the outcome of the French presidential campaign in its final hours was in part a forced error, thanks to an active defense by the digital team of French president-elect Emmanuel Macron's campaign organization, the digital director of the campaign has claimed. Campaign team members told the New York Times that as the phishing attacks mounted, they created a collection of fake e-mail accounts seeded with false information.
"We created false accounts, with false content, as traps," Macron campaign digital director Mounir Mahjoubi told the Times. "We did this massively, to create the obligation for them to verify, to determine whether it was a real account."

In their haste, they left tailtale signs of their identity, "According to a Trend Micro report on April 25, the Macron campaign was targeted by the Pawn Storm threat group (also known as "Fancy Bear" or APT28) in a March 15 "phishing" campaign using the domain The domain was registered by a "Johny Pinch" using a webmail address. The same threat group's infrastructure and malware was found to be used in the breach of the Democratic National Committee in 2016, in the phishing attack targeting members of the presidential campaign of former Secretary of State Hillary Clinton, and in a number of other campaigns against political targets in the US and Germany over the past year."

Forbes, however cautions the evidence is not conclusive, "And, Doman told me, he had not seen "anything definitive" linking the two phishing domains found by Trend Micro and the Macron dump, "though it seemed likely."
Muddying the waters even further is the fact that En Marche's digital lead Mounir Mahjoubi indicated to French press Macron's campaign may have put its own fake data on its servers as part of a "honeypot," set up to attract hackers and trick them into pilfering tagged data. Typically, honeypots are used as traps to track attackers' activities."

Attribution is, and will always be, one of the most challenging problems of cybersecurity response. The folks that are willing to say "probably" as opposed to "surely" are to be congratulated.

This operation will certainly add credibility to Macron's emphasis on cybersecurity and tech for France and his efforts to combat extremism. "French presidential candidate and frontrunner Emmanuel Macron said on Monday he would step up efforts to get technology firms such as Google or Facebook to share encrypted content from messaging services with authorities."

"With an eye on the Elysée Palace, Mr Macron has been only too happy to associate himself with France’s burgeoning tech scene, hoping its open-mindedness and can-do attitude would reflect back on him. When he was economy minister he hastily organised a glitzy reception for him and French entrepreneurs at the Consumer Electronics Show in Las Vegas in 2016. Prosecutors are probing irregularities in the way the party was organised, although the investigation does not involve him.
As economy minister in a socialist government he enthusiastically backed a government initiative to promote the country’s tech ecosystem under a single brand at home and abroad. “Macron has been a strong advocate for the French tech scene,” says Frederic Mazzella, co-founder of ride-sharing company BlaBlaCar."

Monday, April 17, 2017

Brett Whittaker - looking for cyber job Augusta GA Area

Brett Scott Whittaker
                                                               529 Waterford Dr    
Evans, GA 30809
(410) 979-9493 (410) 672-0637

OBJECTIVE:  Seeking a position within the Development or Computer Network Operations (CNO) communities that is commensurate with my experience, challenging in scope, and dynamic in opportunity.


·      Software Development
·      Cyber Operation Instruction
·      Network Analysis
·      Network Operations
·      Intelligence Analysis
·      Digital Forensics
·      Training Management
·      Top Secret/SCI Clearance

Aug 2015 – Apr 2017: Exploit Development Instructor and Training Content Author
·      Professionally instructed hundreds of students in exploit development on linux and windows platforms so they may better defend against the techniques.
·      Authored & built Reverse Engineering courseware that demonstrated virtual memory, stack operations and registers to meet DoD Cyber contract demands.
·      Created professional training materials on modern & legacy encryption techniques for multi-million dollar government contract fulfillment.
·      Utilized gdb and Immunity debuggers to analyze software and develop buffer overflows to defeat ASLR, DEP, stack canaries & cookies for demonstration.
·      Crafted & taught Python scripts to automate analysis and launch remote exploits.
·      Built and demonstrated web exploits to include SQL Injection, Cross Site Scripting, Authentication and Session Management, and others.
·      Trained students on the Metasploit framework to enable exploit communications.
·      Educated DoD cyber warriors on basic/intermediate linux operating system skills.
·      Instructed automation techniques utilizing bash, batch and powershell scripting to survey remote network hosts, network devices and local computers.
·      Developed applications in C and Assembly to demonstrate stack overflow vulnerabilities and proper defensive coding practices.
·      Authored student evaluations based on in-class tasks, formal tests and hands-on performance in active networks for government job-role assessments.
·      Developed and built multiple web-based training modules that provided on-demand remote learning including narration, demonstration, labs and testing.

Dec 2011 - Jul 2015: Analysis Flight Chief, Operator, Planner, Network Warfare Unit
·      Conducted computer network exploitation operations to include characterization, vulnerability scanning, and exploitation to fulfill tailored intelligence needs.
·      Performed in-depth network analysis derived from multi-sourced data and authored operational cyber plans for execution organization-wide.
·      Created and managed the 105 Cyber Combat Mission Team (CCMT) training program that served dozens of members and instructed topics that included network analysis, intelligence, doctrine, operations and critical thinking.
·      Managed Joint Qualification Requirement program that ensured dozens of team members met and maintained qualifications, learned technical skills, and remained current on doctrine and regulations.
Oct 2006 - Nov 2011, Operations Section NCOIC & Operator
·      Performed vast numbers of real-world cyber operations that produced many intelligence products delivered to internal analysts and external customers to include multiple military services, intelligence agencies, the US State Department, and the President of the United States.
·      Performed digital forensics on vast numbers of computers and networking devices that ran numerous operating systems that included Windows 95, Windows 8, *NlX based platforms and various networking systems.
·      Trained dozens of network operators on tools, techniques and procedures for advanced network operations and operational security.

AS — Information Systems Technology, Community College of the Air Force, 2015
SANS Hacker Techniques, Exploits and Incident Handling, 40 hours, June 2014
SANS Security+, 40 hours, October 2013
SANS Reverse-Engineering Malware: Malware Analysis Tools/Techniques, June 2010
SANS Developing Exploits for Penetration Testers & Security Researchers, June 2009
Learning Tree International Certified Ethical Hacker, March 2009
Windermere Digital Interactive Network Operations Course, 480 hours, May 2007
Preliminary Tactical Digital Forensics: Section Zero, 1100 hours, Dec 2007
Prior Air Force Courses: Advanced C & Ada, Oracle 7, Object-Oriented Design, etc.

105 Combat Mission Team, Cyber Fires Planner, 2014
SIGDEV Strategy & Governance, Network Analyst, 2013
Requirements & Targeting, Exploitation Analyst, 2013
Operations Center, Interactive Operator, 2007
Communications Computer System Programmer, 1992-2006

Certified CompTIA Security+, Oct 2013 - Present
Certified Information Systems Security Professional (CISSP), Apr 2009 – 2012 (expired)

Thursday, March 2, 2017

Yahoo Verizon Breach Impact on Future M&A

Executive Summary: Cybersecurity is likely to take another step in developing a quantitative number as to its value to an organization. According to Vanity Fair, Yahoo, a collection of web properties including Flickr and Tumbir), was worth $128B at its peak, was mismanaged, and agreed to be bought for $4.8B. That SEC filing is here. LATIMES reports some analysts do not feel the matchup will work. Now that it is clear Yahoo knew about the data breach before the Verizon acquisition and did not disclose, that is potentially a deal breaker. That SEC filing is here. on 12/15/16 new information indicates that up to a billion accounts have been compromised. Time has an interesting analysis. 3/2/17 The CEO is giving up her bonus and the CLO has resigned.

Because it is the largest known data breach in history, (originally reported as 500M, but MarketWatch and BusinessInsider say potentially 1B (which is starting to be more likely), it is setting up to become "the mother of" all data breach settlements. Forbes points out that poor cybersecurity can lead to lawsuits. Since many people use the same password on multiple systems, one use of the breached data is to brute force the hashes to test on other systems. Threatpost says most of the Yahoo hashes are bcrypt, (potentially expensive to brute force), but a "small percentage" are the outdated, unsafe, MD5.

6/8/17 All data indicates the merger will close followed by a 15% reduction in force for AOL-Yahoo.

CEO Marissa Mayer is now out of a job when the merger completes. She does have a handsome severance package. But the new CEO, Thomas McInerney, has a better package. 

Table of contents:
1) What will the financial impact be for Yahoo and Verizon in terms of the merger?
2) What can we expect in terms of Yahoo's stock valuation?
3) What are the general costs of a data breach?
4) What's next for Verizon?
5) Deja Vu. Operation Aurora 2009

1) What will the financial impact be for Yahoo and Verizon in terms of the merger? The $4.8B deal for at least 800M accounts was supposed to close 1qtr 2017. That means we should know fairly soon. Currently experts are divided. 10/26/16 Fast Company posted an inscrutable article about an interview with Verizon executive Marni Walden that seems to imply there isn't a clear direction.

1.1 Some say the merger will be damaged or the price will change:

Yahoo has now disclosed Verizon may back out of the deal. To make matters worse, there may be another data breach to deal with. Inquisitur reports, (via CNN), that hacked data was sold in three different $300,000 deals and that Verizon is renegotiating. One legal professor is predicting this could set a precedent that will be taught in law schools. 1/5/17 A Verizon executive states they are not sure what they are going to do. USA Today, "They (Verizon) are going to get a price discount. 

10/6/16 a story, (based on a NY Post exclusive), broke on USA today that Verizon was asking for a $1B discount. 12/16/16 Fortune reports they are asking to reprice Yahoo's assets. 1/24/16 the situation is delaying the deal.

The Wall Street Journal reports Verizon CEO "Mr. McAdam, speaking at a technology conference in Menlo Park, Calif., on Monday, said he still sees Yahoo as “a real value asset,” but added: “In fairness we are still understanding what was going on and defining whether it was a material impact on the business or not.

CNBC reports Verizon CEO Lowell McAdam saying "he was "not that shocked" about a Yahoo data breach where the information from 500 million users was stolen, saying it was not a matter of if, but when.

10/13/16 The Wall Street Journal reports "[Verizon]General Counsel Craig Silliman said it was “reasonable” to believe that the breach represented a material event that could allow it to change the terms of the takeover. 

“If they believe that it’s not, then they’ll need to show us that,” said Mr. Silliman, who has been leading Verizon’s review of the situation."

10/18/16 Chicago Tribune reports earnings have faltered for four consecutive quarters.  The condensed financial information is here. CNBC points out they did profit and beat analyst consensus. Investorplace believes that since Verizon earnings are pretty flat in the highly competitive wireless marketplace, they need Yahoo and a reduced price would be a bonus. 10/23/16 WSJ reports that AT&T, (also suffering from flat earnings and competition from Sprint and T Mobile) is making an offer for Time Warner.

10/20/16 WSJ reports Verizon is revisiting the deal. Chicago Tribune quotes Verizon CFO Fran Shammo saying "Material Impact".

1.2 One possibility is that it will have no impact on the deal or even the selling price, NY Post reports, "Some experts said it would be hard for Verizon to prove the hacking was a material adverse change — the one surefire legal gambit that could scuttle the deal."

  The NY Times reports, "Brian Quinn, an associate professor at Boston College Law School, said Verizon had two main options if it decided to use the hack as leverage in setting the terms of the deal.

“They could say, ‘This thing is huge. We want to walk away from the transaction,’” he said. Were Verizon to try to claim that the breach was so severe it was grounds to terminate the deal, it would have to prove that the hack amounted to a material adverse effect on the value of Yahoo.

Such claims can be difficult to prove in court. According to Mr. Quinn’s reading of the merger document for the deal, Verizon would most likely have to prove that certain high-level Yahoo employees were aware of the severity of the hack before the deal was agreed upon, and intentionally withheld that information."

Fortune reports, "Nonetheless, it would be very tough sledding to get a Delaware court to agree a so-called material adverse event had occurred, particularly given that evidence of reduced usage and related revenue declines, for example, would not be immediately available for quite some time."

11/17/16 Investopedia reports AOL is getting ready to lay off part of their sales force, which industry analysts claim indicates the deal will go through.

1.21 When Yahoo knew has a large impact on the deal!

Yahoo has now disclosed they knew about the compromise before the Verizon deal. That puts all the cards in Verizon's court.

Quartz discusses whether Yahoo did or did not know about the breach they announced in September back in July, "In July, a well-known hacker who goes by the name “Peace” told Motherboard that he possessed 200 million Yahoo user details, which were going for 3 bitcoins a pop on a darknet market called TheRealDeal. Yahoo confirmed that it was “aware” of the claim at the time. 

This is the incident that Mayer was aware of in July, as the FT’s anonymous source says: “Marissa was aware absolutely—she was aware and involved when Peace surfaced this allegation in July,” according to the source.

The attempt to verify Peace’s claim then led Yahoo to discover the latest breach, of 500 million user records, according to the FT. Yahoo has attributed this hack not to Peace but to a “state-sponsored actor.” What’s not clear now is when Yahoo discovered the confirmed breach. It seems a safe bet that this discovery happened sometime after Peace made his claims in late July, which is also after the Verizon deal was clinched, on July 25."

NY Post, "Yahoo would have to pay some $145 million if the deal somehow falls apart and it is to blame. While the hack is “upsetting,” it isn’t clear “it is a material adverse change,” one big Yahoo shareholder told The Post."

What is unique in this case is that Verizon has a fairly advanced cybersecurity division. They are uniquely suited to investigate and determine the potential impact to the deal. That said, they have recently suffered their own breachA recent thread posted on a guarded cybercrime forum advertised a database containing contact information for roughly 1.5 million Verizon Enterprise customers for sale at $100,000 for the lot.

10/13/16 Business Insider reported "CEO Marissa Mayer kept secrets from key members of the security team".

1.4 When there is blood in the water sharks are sure to come. Many times when a company is in trouble, other allegations surface. Some of these are inevitable, others are lawsuits and similar hoping the company in trouble will settle.

1.4.1 Further damage by NSA spying news breach, 10/5/16 Reuters released a story that Yahoo searched incoming emails for US intelligence purposes. That would seem to be at odds with Yahoo's transparency policy. Slashdot reports, "The two former employees say that the decision Yahoo CEO Marissa Mayer made to obey the directive resulted in the June 2015 departure of CISO Alex Stamos, who left to work for Facebook." A Google search on 10/6/16 for "yahoo scanned emails" yielded 5.46M results. Fortune reports this could cause trouble with European customers. PredictWallStreet still does not appear to have priced the damage since the breach disclosure; 76% of the responders expect the price to go up. This is inline with the NSADAQ consensus of BUY. 10/5 and 10/6 YHOO closed at 43.71 and 43.68. EFF reports the specific instructions the government gave Yahoo may have to be disclosed. "Section 402 of the USA FREEDOM Act, passed in June 2015, specifically requires government officials to “conduct a declassification review of each decision, order, or opinion issued” by the FISC “that includes a significant construction or interpretation of any provision of law.” The Yahoo order would appear to fall squarely within this provision."

1.4.2 Mercury News reports Scott Ard a former executive that was fired has filed a lawsuit against Yahoo, because Marissa Mayer systematically sought to remove male employees.

1.4.3 Fortune reports Access Now, (international civil rights group) is interested in the email scanning issue.

1.4.4 NY Post has a fact free article that "Marissa Mayer’s days appear numbered as her company disappears"

2) What can we expect in terms of Yahoo's stock valuation? I have been pouring over the financial analysts reports and they seem to be oblivious to the impact of the breach, but I expect that will change. Is the bad news already priced into the stock price?  This may be an exception to an efficient market. After the merger announcement YHOO drifted up to 44.71 on September 6. Now, it is obviously drifting down, and closed September 26 at 42.29. That isn't necessarily surprising, not all data breaches have the impact that Target's did, (profits YoY -40%, earnings YoY - 46%, EPS $.81 down from $1.47, share price from about 70 to 56 now almost back to 70).

However, this is the mother of all data breaches. It is possible there isn't a quant model for something of this size.  According to Yahoo Finance :), 52 week range is 26.15 - 44.92 and 1 year target is 42.75 where they already are. So there is a lot more room for downside than upside.

11/10/16 My prediction is that the quant models will start to be adjusted. The first chart shows an 18% increase for the year. The expectation they will be acquired must be driving that, because revenues certainly are not. But in the past month they are down my 8%, (second chart).  Also look at the trading spikes along the bottom, that can only happen with computer driven trading.

3) What are the general costs of a data breach? The IBM Ponemon 2016 study on data breach costs is probably the most authoritative. According to the study, the average cost is $4M, (compared to Target's 252M before insurance and tax write offs). The cost has increased 29% since 2013. In the United States the average cost per capita is $221, (221 x 500k = 110.5B more than 4x Target's final cost to top-bound this though free/non-revenue accounts arguably have lower value.).

USA Today has what I consider a more reasonable guesstimate, ""I would [ask for a pause] if I was the buyer," said Chris Bulger, founder of Boston tech advisory bank Bulger Partners. "I would consider this a materially adverse change (a factor that could allow a party to back out of a sale) until my lawyer said don’t worry about it."

Bulger estimates that Yahoo will likely have to pay at least $10 per user in reparations. That could amount to $5 billion — more than Verizon's $4.8 billion paying price — making Yahoo "worthless," he said."

3.1 Non-revenue doesn't necessarily mean free or of low value. A deal struck with AT&T 15 years ago allowed Yahoo users to manage their AT&T accounts from Yahoo mail. According to CNET, "The hack puts AT&T in an uncomfortable position. The company is still waiting for data from Yahoo on the specific customers who may have been affected, according to a person familiar with their dealings.

"We began investigating immediately and requested information from Yahoo necessary to determine which email accounts may have been compromised," the company said in a statement. "In the meantime, we are in the process of notifying potentially affected customers.""

3.2 Class action Law suits. The Hill reports a class action suit was filed in California.  USA Today reports two more. The Home Depot settlement, (50M users) was $19.5M, (less than forty cents per user). Target was $39M for 40M users. CNBC references a suit claiming gross negligence.

3.3 SEC investigation and/or fines.  In June 2016, the SEC announced Morgan Stanley agreed to pay $1M over an insider data breach of 730,000 customer accounts, about $1.37 per account.  Assuming that ratio, Yahoo's potential liability could be $685M.

3.3.1 SEC rules may need to be clarified, Reuters, "And the vagueness of SEC's 2011 rules on disclosure and its failure to enforce them are drawing equal attention, privacy lawyers and cyber security experts said."

3.4 Cost of business disruption. Fortune ran a Reuters story saying "many users" closed their Yahoo accounts. The number of active accounts presumably was a factor in the valuation, (on July 15 Yahoo started closing accounts that had not been used in a year). OCT 10 2016 ET reports that they disabled forwarding, so users have to use Yahoo to read their mail.

NOTE: Closing your Yahoo account may be more complex than you might guess. warns you could lose your other Yahoo services like Flickr and the account will still accept email for 90 days. SecurityWeek and TrendMicro disclosed changing the Yahoo password does not prevent your iPhone mail from accessing Yahoo because it has a permanent access credential.

According to Investopedia, "Yahoo’s core business has been slowly declining as the PC advertising and search engine space has come to be dominated by the likes of Google Inc. (GOOG) and Amazon (AMZN)." Depending on who you ask, recode, PR News, Marketing Land, Bloom Reach,  somewhere between 44% and 55% of all online product searches begin with Amazon.  After the breach, it is likely less people will use Yahoo.

3.5 Cost to diversity. Women executives have been leaving the company, no one is sure what. Reuters reports "Women leaders organically left because other opportunities were more appropriate for them," said Margenett Moore-Roberts, Yahoo's global head of diversity and inclusion. She said most of the women executives who left did so voluntarily after the plan to sell the core company was announced.

4) What's next for Verizon?

If Materially Adverse Change
          Price reduction OR Verizon walks away, (and possibly makes an offer for Twitter*)
          It is going to be a long winter for Verizon

* Fortune magazine reports Twitter will probably be bought at around $27 per share. 10/23/16 maybe not it closed on Friday at 18.09 and can't seem to find a buyer. Motley Fool reports declined to make an offer.

4.1 This may be a blessing, combining AOL and Yahoo seems a bit like bows and arrows against modern weapons. Quartz has a pre-breach article claiming the merger will not end well.

5) Deja Vu. Operation Aurora 2009

Wikipedia reports Yahoo was targeted by Operation Aurora in 2009. Multiple sources, Darkreading, Security Affairs, Nextrio, mention they were targeted, but the impact is sketchy. SANS NewsBites reports, "A number of foreign journalists based in China are claiming their Yahoo email accounts have been hacked. The Foreign Correspondents Club of China (FCCC) has confirmed that eight journalists have had their Yahoo email accounts hacked including one that had a forwarding address added to the account. Yahoo has made no direct comment regarding the claims and says that it is "committed to protecting user security and privacy." Earlier this year the Google mail accounts of Chinese dissidents were targeted in an attack on Google. The FCCC is advising users to take care when using email, especially for sensitive issues, and warning people that "email does not appear to be secure in China, and that alternate means of arranging interviews and conducting other sensitive business are often preferable". "