Thursday, February 25, 2010

More fallout from PlainsCapital vs Hillary Machinery

Last week Hillary Machinery filed it's counter to PlainsCapitals lawsuit. The PlainsCapital suit seeks nothing from Hillary (other than legal fees and court costs), but wants a judge to rule that PlainsCapitals security measures were commercially reasonable at the time of the bogus transfers. Hillary is seeking the return of the unrecovered monies and legal costs.

Most of the security community, or the most of the portion making their opinion known, seem to believe Hillary is in the right. But not everyone is ready to pick a side just yet. Benjamin Wright, an expert in data security and cyber investigations law has pointed out in his blog that we only have Hillary's side of things, so until PlainsCapital has it's say, any conclusions we come to are speculation.

But as things have developed, PlainsCapital's say may be too little, too late. Hillary has not stood still and has not played the quiet game. They have told their story loudly to anyone willing to listen, and it is a compelling story. Even if PlainsCapital had security measures in place that Hillary hasn't mentioned, the Banks reputation has been tarnished, and this incident will probably pop up when least expected for years to come. And regardless of who wins, both litigants will probably both find the way they handle financial transfers changed forever when this is over, because real fallout from this whole event is not going to hit just PlainsCapital or Hillary Machinery. It could change the way banks do business, and that will affect anyone who deals with banks.

DarkReading.com reports that at next weeks RSA Security conference Authentify, Inc. (who are consulting with Hillary) will be asking security professionals to sign a petition to Congress in an effort to force banks to establish better security for business customers. I don't think anyone wants more government regulation, but the fact is that what happened to Hillary Machinery and PlainsCapital isn't unique, or even unusual, even if the lawsuit is. Apparently small and medium size banks haven't done anything to correct the situation. With the attention of Washington being called to it, the government probably will.