SolarWinds Ruling Hits SEC for Using Accounting Law on Hacks (1)

A federal judge’s decision tossing most of the Securities and Exchange Commission’s lawsuit against SolarWinds Corp. deals a major blow to the agency’s efforts to apply a decades-old accounting law to cybersecurity breaches.

Among the claims dismissed from the SEC’s lawsuit was a charge that SolarWinds violated internal accounting control rules in connection with a hack of its software that intruded on dozens of companies and at least nine government agencies that was revealed in December 2020.

The accounting rules require companies to accurately report financial transactions and events, Judge Paul Engelmayer of the US District Court for the Southern ...