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Cybersecurity Stocks Trade Lower After White House Eliminates Vacant Cyber Coordinator Position

Cybersecurity Stocks Trade Lower After White House Eliminates Vacant Cyber Coordinator Position

Cybersecurity stocks are slowly recovering after a top U.S. office appeared to withdraw support for their mission.

FireEye Inc (NASDAQ: FEYE) had fallen 3.7 percent, Palo Alto Networks Inc (NYSE: PANW) 1.8 percent and Check Point Software Technologies Ltd. (NASDAQ: CHKP) 1.3 percent Wednesday after the White House National Security Council eliminated its vacant cybersecurity coordinator post Tuesday.

ETF MANAGERS TR/ETFMG PRIME CYBER S (NYSE: HACK) and other players fell marginally.

What Happened

The NSC’s cybersecurity coordinator had been charged with advising policy to strengthen the government’s digital defense and cyber weapons.

A memo from the office of National Security Adviser John Bolton said the position was obviated by lower-level officials who made cybersecurity issues a “core function” of the council, according to the New York Times.

"Today's actions continue an effort to empower National Security Council senior directors," council spokesman Robert Palladino said in a statement, according to Reuters. "Streamlining management will improve efficiency, reduce bureaucracy and increase accountability."

The responsibilities of the old role will be split between two existing members of the NSC focused on offensive and defensive policies.

Why It’s Important

Cutting the top cyber policy position shrinks an already contracting executive team of cybersecurity experts and appears to delegitimize the industry.

However, the Department of Homeland Security assured of the sector’s importance with an announced strategy to address threats.

"The cyber threat landscape is shifting in real-time, and we have reached a historic turning point," DHS Secretary Kirstjen Nielsen said in a statement. "Digital security is now converging with personal and physical security, and it is clear that our cyber adversaries can now threaten the very fabric of our republic itself."

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