ZIFFPAGE TITLEAftershocks

By CIOinsight  |  Posted 09-05-2005 Print Email

Aftershocks

In late May, FBI and Secret Service agents served warrants at the homes of several hackers in Minneapolis, Winston-Salem, N.C., and elsewhere, seizing computers and disks they believe to be related to the LexisNexis case. According to a report in the Washington Post, the hackers gained access to the Accurint database, created a number of sub-accounts, looked up themselves, friends and celebrities, and then began selling Social Security numbers to data thieves. The investigation is ongoing, but one suspect told the newspaper that the Feds "got everybody."

Though the criminal investigation seems to be wrapping up, the shock waves from the break-in continue to reverberate throughout the LexisNexis ecosystem. "Have you seen what's happened to ChoicePoint's stock price?" asks Mark Marcon, a financial analyst with Milwaukee-based Robert W. Baird & Co., which downgraded ChoicePoint in June to neutral from outperform. ChoicePoint's stock lost more than a quarter of its value in the months following the disclosure of its security breach. Because LexisNexis is part of a much larger holding company, it's hard to say what effect the theft has had on investors.

Still, parent company Reed Elsevier's shares have been in steady decline since March. "These guys do a lot of business with the government, so it's important to have a good public image," says Marcon. "It's one of many factors that go into valuing a company."

Just ask John Perry, CEO of CardSystems Solutions, the credit card transaction processing company from whom 40 million credit card records were stolen in June. He told Congress that because of the security breach, his company faced "imminent extinction"—the result of its two biggest customers, Visa and American Express, having canceled their contracts with the Atlanta-based company. "CardSystems is being driven out of business," he said.



 

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