[ISN] New York Investigation Firm Plans to Buy Internet Consultant

From: mea culpa (jerichoat_private)
Date: Wed Jan 06 1999 - 23:39:15 PST

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    January 4, 1999
    New York Investigation Firm Plans to Buy Internet Consultant
    Anticipating an era in which fighting computer crime will be as big a
    business as Internet commerce, Kroll O'Gara Co., the private security and
    investigation company in New York, said it would announce Monday that it
    was acquiring Securify Inc., a small Silicon Valley computer-security
    firm, for $55.2 million in stock. 
    Securify is among the small but rapidly growing consulting firms that have
    sprung up as tens of thousands of corporations connect to the Internet.
    Its acquisition by Kroll shows that security companies are beginning to
    recognize the rapidly increasing risks in cyberspace. 
    The deal, which was finalized after the close of the market on Thursday,
    the last day of trading in 1998, will permit Kroll to expand its small
    business in computer-security consulting, computer crime and
    computer-fraud prevention. 
    Kroll O'Gara will acquire Securify in exchange for 1.4 million shares of
    stock, totaling $55.2 million. As part of the deal, an additional 211,000
    shares will be used as incentives to persuade Securify employees to stay
    with the company. 
    Kroll executives said the company had explored a large part of the
    computer- security industry before settling on Securify, based in Mountain
    View, Calif. 
    "We're very familiar with that community," said Jules Kroll, chief
    executive of Kroll O'Gara. "We felt the credentials and bona fides of the
    people at Securify are a combination of intellectual and academic as well
    as those who have been out there doing it in the cyberstreets. It's a nice
    Over the last decade, he said, Kroll's traditional business of
    investigating business fraud has become increasingly computer-oriented. 
    "We've been on the fringes of the business for a long time," Kroll said.
    "It became abundantly clear to us that we could not grow in the business
    by making incremental hires." 
    Securify was founded earlier this year by two computer-security experts,
    Tahar Elgamal and Dan Kolkowitz. Elgamal had been chief scientist at
    Netscape Communications Corp., where he helped create Internet security
    standards widely used in commercial transactions online. Kolkowitz has
    computer-security experience at Silicon Valley companies, including Tandem
    Computers and Bridge Communications. 
    As both large financial institutions and small Internet start-ups begin to
    rely on the Internet for business transactions, risks are being created
    that are not always adequately addressed by available hardware and
    Securify has focused both on auditing companies' hardware and software for
    potential risks and on assisting those who have been victims of either
    outside electronic intruders or insider computer fraud. 
    "We have specialized in developing encryption, authentication and
    monitoring technologies," said Kolkowitz, who is Securify's vice president
    for engineering. The company will provide Kroll with both a business and
    intellectual presence in Silicon Valley, he said. 
    The complexity of today's Internet-based financial systems has left many
    financial institutions unable to adequately assess risks, he said. 
    For example, many companies are now creating so-called virtual private
    networks, which allow different branches to communicate through the
    Internet. However, this does not entirely secure a company's computer
    network activities, which may remain vulnerable to insider fraud, the
    largest type of computer crime. 
    Traditional corporate security issues have been vastly complicated by
    computer networks, Kroll said. He cited the Year 2000 computer problem as
    a potential new area of vulnerability. In the last-minute dash to fix the
    problem, many companies have been hiring temporary workers and consultants
    -- often without properly considering the consequences of providing access
    to their computer systems, he said. 
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