Why this case study matters
The hardest part of the SEC cyber rule is not the form. It is the timing, judgment, and discipline required when you do not yet know everything.
In a real incident, you rarely get neat facts delivered in order. You get partial logs, conflicting vendor opinions, executive anxiety, and internal debates about how much to say. You also get an investor relations team that wants to protect the company's reputation and a legal team that wants to avoid saying anything that later becomes wrong.
The SEC cybersecurity disclosure rule forces a public company to bring order into that chaos. It requires two things that are uncomfortable at the same time:
1.Decide whether an incident is material based on what you reasonably know
2.Disclose it promptly once you determine materiality, even if the investigation is still active
This case study shows how one public company handled that reality. It is a composite case study based on common patterns seen in public filings, governance expectations, and incident response practices. Names, specific systems, and some details are generalized to focus on decision making and compliance.
Background: The public company and why investors cared
Company profile
VantaWorks Inc. is a mid cap U.S. public company that provides business software to enterprise customers. Its revenue depends on subscription renewals and customer trust, and its products include a hosted platform and integrations with third party services.
The company is not a household name, but it is the kind of issuer that investors watch for stability and predictable cash flow. Any disruption to service availability, customer data, or renewal confidence can move the stock.
Governance setup before the incident
Before the incident, VantaWorks had a reasonable governance structure:
- A board risk committee that received quarterly cyber updates
- A Chief Information Security Officer reporting to the CIO
- An enterprise risk management process that included cybersecurity as a top risk
- A third party incident response retainer and a cyber insurance policy
They also had gaps:
- Materiality assessment was not formalized as a repeatable workflow
- Some of their disclosures about oversight were generic and not very specific
- Incident communications were not tightly controlled across legal, security, and investor relations
Those gaps did not feel urgent until they had to file in real time.
Day 1: The incident begins with a vendor alert that looks routine
6:18 AM: A third party notification
VantaWorks' cloud monitoring provider emailed the security team about unusual authentication patterns in a production environment. The message was technical but not alarming on its face, the kind of alert you can get from misconfiguration or a deployment change.
The on call engineer checked logs and saw:
- A spike in failed logins against a service account
- Successful authentication from an unfamiliar geography
- A short burst of API calls that did not match normal traffic
At this point, nothing was proven. But the signal was strong enough to escalate.
7:05 AM: Incident bridge is launched
The CISO initiated an incident bridge with:
Security operations, cloud engineering, legal counsel, compliance, and a representative from the monitoring provider.
A key decision was made immediately:
Treat this as a potentially significant incident until evidence proves otherwise.
This is not overreaction. It is discipline. Under the SEC rule, the biggest failures often start as "we did not think it was serious."
The early scramble: Containment and the first question from leadership
8:10 AM: Containment begins
The cloud engineering team rotated credentials for the service account, restricted network paths, and placed additional monitoring on the environment.
They also preserved logs. This detail mattered later. Without logs, you cannot assess impact, and without impact assessment, materiality decisions become guesswork.
9:00 AM: The CEO asks the question everyone asks
On the executive call, the CEO asked:
"Is this something we need to disclose?"
The CISO answered carefully:
"We have evidence of unauthorized access attempts and one confirmed suspicious login. We are investigating scope and impact. We do not yet know whether customer data was accessed or whether the incident is material."
That answer is exactly what should be said. It is factual. It avoids absolutes. It separates known facts from unknowns.
It also triggered the next step: create a structured materiality assessment track alongside technical response.
The SEC rule in real life: Materiality is not a gut feeling
The mistaken approach
Many companies assume materiality is just a finance decision, or that it can be decided at the end when the dust settles. That approach is dangerous.
Materiality under the SEC framework depends on what a reasonable investor would consider important. That can include:
Operational disruption, financial impact, reputational harm, legal exposure, customer churn risk, and future revenue implications.
Materiality is not just "did we lose money today."
It is "could this affect investor decisions."
The disciplined approach VantaWorks used
VantaWorks created a materiality workstream with a simple structure:
- Identify potential investor relevant impacts
- Assign owners for each impact category
- Update the assessment as facts develop
- Record every materiality related decision with timestamps and supporting evidence
They also established an internal "do not guess" rule:
No one could claim "no customer data accessed" unless logs supported that statement.
This rule prevented future contradictions.
Day 2: The incident becomes more serious, but facts are still incomplete
10:40 AM: Evidence of limited intrusion
Forensics revealed that the suspicious login likely came from compromised credentials for a service account used in one part of the hosted platform.
They confirmed:
- The attacker accessed a subset of administrative functions
- The attacker attempted to create tokens for persistence
- The attacker ran queries against configuration data
They could not yet confirm whether customer content data was accessed.
The investigation suggested the intruder was trying to expand access. That increased risk. It also increased the probability that this could become a material cyber incident disclosure event.
1:15 PM: Service impact appears
As the company tightened controls, one region of the platform experienced intermittent outages. A small percentage of customers could not access certain features for about 90 minutes.
The outage was not catastrophic, but it was visible. Customer support began receiving tickets. Social media chatter began. This increased reputational risk.
Still, the company did not panic. They stayed on process.
Day 3: The board gets involved and governance disclosures come under the microscope
9:00 AM: Board briefing
The CISO and General Counsel briefed the board risk committee.
The board asked three questions that matter under SEC cyber risk governance expectations:
- What happened, as best we know
- What is the likely impact on operations, customers, and finances
- How are we deciding materiality, and what is our plan for disclosure discipline
The board also asked a question that many boards do not ask, but should:
"If we disclose now, can we avoid saying something we later regret?"
The General Counsel answered with the correct framing:
We disclose based on what we know, avoid speculation, and we can update later as facts become available.
This is the mindset that prevents SEC trouble.
The moment of decision: Determining materiality
The materiality factors VantaWorks evaluated
By late Day 3, VantaWorks evaluated materiality across five categories:
1) Operational disruption
There was a platform outage affecting customers for a limited time.
2) Customer impact and trust
Support tickets increased. Some enterprise customers requested briefings. A few asked whether this impacted their data.
3) Financial impact
No immediate revenue loss was confirmed, but the company identified a non trivial risk:
If key enterprise customers lost confidence, renewals could be impacted.
4) Legal and regulatory exposure
Depending on whether customer data was accessed, additional notifications could be required under privacy or contract clauses.
5) Reputational risk
The company observed increased customer concern and media inquiries to the PR inbox, even without a public statement.
The decisive fact that tipped the scale
The forensic team found evidence that the attacker accessed a system containing metadata linked to customer environments. It was not necessarily the customer content itself, but it was sensitive.
They could not prove exfiltration, but they could not confidently rule it out yet.
At this point, leadership concluded:
A reasonable investor could consider this incident important due to the potential customer trust and revenue implications, plus confirmed unauthorized access and service disruption.
This is when they determined the incident was material.
That determination triggered the SEC clock for four business day disclosure and the requirement to file under Form 8 K Item 1.05.
The filing sprint: Writing the 8 K without harming the investigation
The internal risk
Once materiality is determined, the timeline is strict. Teams feel pressure to rush language. That is how mistakes happen.
VantaWorks used a drafting model with three rules:
- Draft in plain language investors can understand
- State what is known and what is still under investigation
- Avoid technical details that increase security risk
They assigned a single "truth owner" to each major claim:
Security owned the technical facts, Legal owned the risk phrasing, Finance owned the impact framing, and Investor Relations owned readability.
No one could insert assumptions.
Building the content for Form 8 K Item 1.05
The draft included:
- The general nature of the incident
- The scope as known at the time
- The timing of discovery and response
- The impact and reasonably likely impacts, described carefully
- Actions taken to contain and remediate
They deliberately avoided:
- Naming vendors
- Stating attribution
- Claiming "no data accessed" without proof
- Giving exploit details
This drafting discipline mattered because the SEC will compare later statements against earlier statements. Contradictions can create enforcement risk.
Communication discipline: Avoiding contradictions across teams
The dangerous pattern
A common failure is when:
Legal writes the 8 K, PR drafts a customer statement, Support uses a separate script, and Sales reassures customers with informal promises.
Then the company ends up with three versions of "what happened."
VantaWorks stopped that pattern by:
- Creating one approved "facts sheet" updated daily
- Restricting customer facing statements to that sheet
- Training executives on what not to say
This prevented mismatched claims and reduced panic.
Filing day: How they met the deadline cleanly
Submission within the required window
VantaWorks filed the 8 K within the required period after determining materiality, satisfying the four business day disclosure requirement.
They also prepared for follow up questions:
Investors and analysts often ask for clarity immediately after filings.
Instead of improvising, they committed to:
Provide updates in periodic reports as appropriate and continue the investigation.
They did not promise a final answer in 48 hours. They did not over reassure. They stayed consistent.
The next two weeks: Investigation evolves and the company updates responsibly
Forensic findings become clearer
Over the next week, the forensic team confirmed:
- The attacker accessed a limited set of administrative tools
- The attacker attempted persistence but was blocked by credential rotation
- Evidence of large scale customer content exfiltration was not found in reviewed logs
However, they did find evidence that some customer environment metadata was accessed. The company treated this as sensitive.
Customer response
Enterprise customers demanded direct briefings. VantaWorks used a structured approach:
- Provide verified facts only
- Explain mitigation steps
- Describe monitoring and hardening measures
- Offer support for customer security teams
Customers were unhappy, but many appreciated the clarity.
Investor response
The stock dipped modestly after the disclosure, then stabilized. Analysts asked whether churn risk could increase.
VantaWorks did not guess churn numbers. They explained that they were monitoring renewal pipelines and customer sentiment and would reflect known material impacts in future reporting.
This honesty preserved credibility.
Governance disclosures after the incident: The second half of SEC compliance
Why governance disclosures matter
The SEC rule is not only about incident disclosure. It is also about how you describe oversight and management responsibility.
VantaWorks realized a painful truth:
Some of their prior risk disclosures were generic.
After the incident, they refined how they described:
- Board oversight cadence
- Management roles in cyber risk
- How cyber risk is integrated into enterprise risk processes
They did not exaggerate. They described what actually existed.
This is important under SEC cyber risk governance expectations. Overstating governance maturity can be as risky as understating it.
What they changed after the incident
1) Formal materiality playbook
They created a written materiality assessment playbook with:
- A checklist of investor relevant impact categories
- Clear escalation triggers
- A timeline for board involvement
- Documentation standards for every decision
2) Better logging and detection
They invested in centralized log retention and improved monitoring for:
Service account abuse, token generation, and administrative activity anomalies.
3) Service account governance
They reduced service account privilege and implemented:
Rotation schedules, tighter access control, and stricter authentication policies.
4) Controlled communications workflow
They created a single communications channel for incident facts that fed:
Legal filings, customer statements, and executive messaging.
5) Incident exercises that include SEC disclosure
They ran tabletop exercises not just for technical containment, but also for:
Materiality decisions, drafting an 8 K, and managing investor communications.
Most companies do not practice this. That is why many struggle when it happens for real.
Common mistakes this case study helps you avoid
Mistake 1: Waiting for perfect certainty
The SEC rule is designed for real world uncertainty. You can disclose responsibly without having every detail.
Mistake 2: Saying "no data was accessed" too early
If you cannot prove it, do not say it. Use careful language. Separate known and unknown.
Mistake 3: Letting different teams tell different stories
One facts sheet, one narrative, strict discipline. That is how you avoid contradictions.
Mistake 4: Treating cybersecurity as only a tech issue
Under the SEC cybersecurity disclosure rule, cybersecurity is investor relevant business risk and governance risk.
The outcome: A defensible disclosure without over disclosure
VantaWorks did not escape consequences. They had disruption, cost, customer frustration, and scrutiny. But they avoided the most damaging outcome: loss of credibility through inconsistent statements or missed deadlines.
They:
- Determined materiality based on documented factors
- Filed under Form 8 K Item 1.05 within the required window
- Communicated consistently without speculation
- Updated governance disclosures with substance
- Improved controls and documentation afterward
That is what strong compliance looks like under pressure.
Closing
If you are a public company, the SEC rule is not something you think about only after an incident. You need a repeatable process in advance.
You need:
A materiality playbook, a drafting workflow, board escalation triggers, and a communications discipline that prevents contradictions. You also need the humility to say "we are investigating" instead of filling gaps with guesses.
This case study shows that you can comply with the law, protect investors, and preserve credibility even when you do not have perfect information.
References
- U.S. Securities and Exchange Commission cybersecurity disclosure rule summaries and adopting releases
- Form 8 K Item 1.05 cybersecurity incident disclosure requirements
- Public company cybersecurity governance disclosure expectations and enforcement commentary
- Common incident response and disclosure coordination practices used in SEC reporting environments