PrivCap Speaks With Prakash Mehta on Cybersecurity Risks for Private Equity Firms
Akin Gump investment management practice co-head Prakash Mehta was quoted by PrivCap for its article “The New Due Diligence” discussing cybersecurity risks facing private equity firms. ,
The article notes that cybersecurity is increasingly on the radar screens of private equity firms during the portfolio acquisition process, with Mehta stating that such risks are “[an] emerging focus of businesses around the world.”
Discussing the need for a firm’s due diligence to extend beyond the portfolio company, all the way to every third party with access to the company’s data, Mehta remarked, “You cannot just protect on your end. How strong is the cybersecurity with those who have your information?”
On the topic of the potentially severe consequences a firm might encounter if it finds itself the target of a cybersecurity attack, Mehta observed that hackers could potentially force a wire transfer from the firm’s pools of capital. Mehta noted that although he is unaware of any such efforts that have proved successful, he is aware of such attacks being thwarted.
The article also quotes from an Akin Gump client alert concerning a report produced by the SEC that notes uneven levels of cybersecurity preparedness among U.S. broker-dealers and investment advisers.