Blackbaud Inc., a South Carolina-based public company that provides donor data management software to non-profit organizations, has agreed to pay a $3 million civil penalty to settle charges over misleading disclosures about a 2020 ransomware attack that impacted more than 13,000 customers. The SEC announced the settlement on March 9, 2023.
Misleading Disclosures
On July 16, 2020, Blackbaud announced that the ransomware attacker did not access donor bank account information or social security numbers. However, within days, the company’s technology and customer relations personnel learned that the attacker had accessed and exfiltrated this sensitive information. Unfortunately, these employees did not communicate this information to senior management responsible for public disclosure. This was due to the company’s failure to maintain disclosure controls and procedures. As a result, in August 2020, the company filed a quarterly report with the SEC that omitted material information about the scope of the attack and misleadingly characterized the risk of an attacker obtaining such sensitive donor information as hypothetical.
SEC’s Order
The SEC’s order finds that Blackbaud violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and Section 13(a) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-13, and 13a-15(a) thereunder. Blackbaud agreed to cease and desist from committing violations of these provisions and pay a $3 million civil penalty without admitting or denying the SEC’s findings.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
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