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SEC Warns of Ransomware Attacks

The U.S. Securities and Exchange Commission is asking broker-dealers, investment advisers and funds to redouble their cybersecurity efforts in wake of the global cyber-attack of the WannaCry virus that has spread to more than 150 countries, disrupting critical sectors of the world economy – from transportations systems to healthcare.

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FBI Issues Ransomware Warning

Amid cyber-attacks that have spread around the globe affecting at least 150 countries, the Federal Bureau of Investigation has issued a FLASH report warning of the effects of a ransomware known as “WannaCry.”

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The Tanium Affair Reminds Us That Cybersecurity Risks Are Everywhere

The Wall Street Journal recently reported that well-known cybersecurity startup Tanium, Inc. had been inadvertently exposing one of its clients’ sensitive data during product demonstrations.  Unbeknownst to the Tanium client—the non-profit El Camino Hospital, in Santa Clara County, California—Tanium had been giving prospective customers a look inside of El Camino’s secure network to show how well its cybersecurity software worked.  Not only did Tanium give the presentation “hundreds of times,” it also posted videos of the demonstration on its public website.  All of this was without El Camino’s permission.

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Facebook Warrant Case: Stark Debate and a Divided Court

We previously posted about a case before the New York Court of Appeals that concerned whether Facebook has the legal standing to challenge search warrants seeking its users’ data.  In April, the court sided with the Manhattan District Attorney’s office and rejected Facebook’s challenge.  The three opinions by the judges—particularly the concurrence by Judge Jenny Rivera—provide insight into this evolving area of law.

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Dismissal in Michael Stores Data Breach Case

In the latest decision on Article III standing in a data breach case, the U.S. Court of Appeals for the Second Circuit ruled that a credit card holder – who neither pleaded specific facts about the time or effort spent monitoring her credit after a data breach, nor sought leave to amend her complaint to do so – lacked standing to pursue a putative class action against Michael Stores, Inc. In a Summary Order issued earlier this week, the court affirmed the dismissal of claims related to a cyber-attack on the specialty retailer that affected 2.6 million credit cards and exposed payment card information.

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FBI Warns of Cyber Threat in Healthcare Sector

The FBI is warning the healthcare sector of a new cyber threat. In a Notification issued last week, the FBI said that it is “aware of criminal actors who are actively targeting” protected healthcare information (“PHI”) and other personally identifiable information (“PII”) from medical facilities “to intimidate, harass, and blackmail business owners.”

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Craig A. Newman will Present on Implementing the New DFS Cybersecurity Regulation at a Cardozo Data Law Initiative CLE Program on April 28th in New York City

Craig A. Newman will be speaking on a panel entitled, “Implementing the New DFS Cybersecurity Regulation” at a Cardozo Data Law Initiative CLE Program on April 28th in New York City. The Cardozo Data Law Initiative is a program designed to prepare law students for careers in the rapidly expanding legal fields of information governance, e-discovery, data privacy, social media law, and cybersecurity.

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Patterson Belknap Publishes Mini-Treatise on New York Cyber Regulation

Patterson Belknap Webb & Tyler LLP is pleased to announce the publication of New York’s Cybersecurity Regulation for Financial Institutions- a New Age of Cybersecurity Regulation: Raising the Bar and Demanding Leadership Accountability, published by and available on Bloomberg Law.

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Colorado Regulator Proposes New Cybersecurity Rules for Financial Institutions

Increasingly, states are enacting cybersecurity regulations for financial institutions and investment advisors. Following New York’s groundbreaking regulation (which we have covered in detail here), Colorado recently proposed changes to its state securities act that would impose new cybersecurity requirements on broker-dealers and investment advisors that operate in the state. 

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Help Is On the Way: Cybersecurity Bill Aims to Provide Assistance and Training

A recently introduced bipartisan bill seeks to provide state and local authorities with additional resources to assist in the fight against cybersecurity threats.  Last month, Senators John Cornyn (R-Tex.), Patrick Leahy (D-Vt.), and Ted Cruz (R-Tex.) introduced the National Cybersecurity Preparedness Consortium Act, which would authorize the Department of Homeland Security to work with non-profit consortia to assist state and local governments with their cybersecurity preparedness and response efforts.  House Representative Joaquin Castro (D-Tex.) introduced a companion bill the same day.

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Digital Divide Deepens: Tech Community Backs Second Circuit in Clash with Magistrates over Reach of U.S. Warrants

The technology community took aim at a recent federal magistrate’s ruling that ordered Google Inc. to comply with search warrants seeking customer emails stored on servers abroad, calling the decision “an impermissible extraterritorial application of U.S. law.” In rejecting a recent federal appeals court decision in a similar case in favor of Microsoft Corp., U.S. Magistrate Thomas J. Reuter in Philadelphia ruled that transferring emails from a foreign server to the U.S. was not tantamount to a seizure beyond American borders. The technology companies urged the court to reject the “fiction that such a foreign search and seizure is a domestic act….”

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Privilege Waiver: Is Your File-Sharing Site a Public Park Bench?

While courts and the Federal Rules of Evidence take an increasingly pragmatic approach to the question of when inadvertent disclosure of privileged information results in waiver, a recent federal magistrate’s ruling serves as a potent warning that use of a file-sharing site – without sufficient safeguards – may constitute a waiver. Harleysville Insurance Co. v. Holding Funeral Home, Inc., No. 1:15-cv-00057 (W.D. Va. Feb. 9, 2017) is the first published decision to find that the use of a file-sharing site to exchange potentially privileged information constituted a waiver of the attorney-client privilege and work product protection—because the company failed to password protect its transmission.

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Digital Privacy Rights: More Confusion

March 9, 2017 - Craig A. Newman wrote "Digital Privacy Rights Take A U-Turn, And Congress Needs To Act," published in Forbes on March 7, 2017. For a link, please click here. In the article, Mr. Newman looks at two recent decisions issued by federal magistrates that are contrary to the a case decided just seven months ago by the U.S. Court of Appeals for the Second Circuit in Microsoft v. United States.

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Final DFS Cybersecurity Regulation Issued

New York’s Department of Financial Services issued its final Cybersecurity Regulation last night with an effective date of March 1, 2017. For a comparison between the previous proposal and the final regulation, please click here.

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Does Facebook Have the Right to Challenge Search Warrants Seeking Facebook Users’ Data? New York’s Highest Court Hears Argument

Facebook is the latest social media giant to push back on law enforcement efforts to seek user information.  On Tuesday, the New York Court of Appeals heard oral argument in a case focusing on whether Facebook has the right—or legal standing—to challenge bulk search warrants issued by the Manhattan District Attorney’s office for its users' data.  The case is In re 381 Search Warrants Directed to Facebook, Inc. and Dated July 23, 2013.

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Third Circuit Finds FCRA Violation Alone Confers Standing for Data Breach Suit

The United States Court of Appeals for the Third Circuit recently ruled that a data breach class action may proceed on the basis of a Fair Credit Reporting Act (FCRA) violation alone, even where the putative class members do not allege that they were actually harmed by the breach.  The ruling, which both relies on and distinguishes the Supreme Court’s recent analysis of FCRA standing in Spokeo v. Robins, suggests that at least in the Third Circuit, “injury” from a data breach may be presumed from the fact of the breach itself.  This, in turn, could have the effect of expanding potential liability for any consumer-facing entity that suffers a breach.

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Ajit Pai and the FCC’s Role in ISP Privacy Regulation under President Trump

On January 23, 2017, President Donald Trump named Ajit Pai as Chairman of the Federal Communications Commission (FCC).  In his previous role as the senior Republican on the FCC under President Barack Obama, Mr. Pai was an outspoken critic of the agency’s decision to assert jurisdiction over Internet Service Providers (“ISPs”) and its rules governing broadband privacy.  Pai’s appointment suggests that significant changes may be on the horizon.

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Second Circuit Court of Appeals Denies Rehearing in Microsoft Case

Back in December 2013, a U.S. magistrate issued a seemingly routine warrant in a narcotics case demanding that Microsoft turn over messages from a customer’s email account that resided on a server in Ireland.  That warrant, which issued under a 1986 law called the Stored Communications Act (“SCA”), 18 U.S.C. § 2703, is still being debated today.

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Keeping Section 5 Alive: The FTC Brings Suit Against D-Link

The U.S. Federal Trade Commission (“FTC”) has filed suit against Taiwan-based D-Link Corporation and D-Link Systems, Inc. (collectively, “D-Link”), manufacturers and sellers of home networking devices including routers, cameras, baby monitors, and video recorders.  The lawsuit claims that D-Link failed to take reasonable steps to protect its devices from known and foreseeable risks of unauthorized access.

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LabMD’s 11th Circuit FTC Appeal: The Opening Shot

Firing the opening salvo in its appeal of one of the most controversial data security decisions by the U.S. Federal Trade Commission in years, LabMD accused the agency of overstepping its authority and “destroy[ing] [the] small medical testing company” in the process.

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Indictment Issued in Law Firm Hacks

In what New York’s top federal prosecutor called a “wake-up call for law firms around the world,” three Chinese citizens have been charged with hacking into the servers of two prominent – but unidentified – international law firms to steal confidential client information in connection with pending M&A deals

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Uber Riders: Choosing Convenience or Privacy

What Consumers Should Know About Uber’s New Location Settings

In a recent update to its widely used application, Uber has implemented a change in location settings that some users are not happy about.  Before the update, users could limit Uber’s ability to track their location to “only while using app.”  But the new update strips users of that option. 

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NYS Cyber Regulation Gets Drubbing by Industry Groups in Albany

Industry groups continued their assault yesterday on New York’s “first-in-the-nation” cybersecurity regulation by telling state lawmakers that the proposed regime was inflexible and unfairly burdened smaller institutions.

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“Life is Short. Have an Affair.” And Then Settle With the FTC.

Yesterday, the Federal Trade Commission (“FTC”) announced a settlement with the owners of “dating site” AshleyMadison.com, arising from a July 2015 data breach that received broad media coverage.  According to a proposed order filed in the District Court for the District of Columbia, the operators of the website are also simultaneously settling with thirteen states—including New York—and the District of Columbia.

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DFS Cyber Regulation Gets Public Airing in Albany

Just weeks before the Cuomo administration’s “first-in-the-nation” cybersecurity regulation is scheduled to go into effect, the New York State Assembly Standing Committee on Banks will open a public hearing on Monday, December 19th into the controversial plan to require financial institutions that operate in New York to comply with a series of strict – and in some cases, unprecedented – data security measures.
 

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Wake-Up Call: Law Firms in the Cybersecurity Crosshairs

Last week marked the first time a U.S. law firm was publicly named in a class action data security lawsuit.  Originally filed in April 2016, the class action complaint in Shore v. Johnson & Bell, Ltd., 16-cv-4363 (N.D. Ill.), was unsealed last week after months of back-and-forth over whether the alleged security flaws had been patched.  The complaint accuses Johnson & Bell, a mid-sized Chicago firm, of “systematically exposing confidential client information and storing client data without adequate security.”  The lawsuit makes no claim that any client information has been stolen or misused.  Even so, the filing of this complaint amplifies the risks already facing law firms – including reputational – at a time when data security is a top concern for law firms and their clients.

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Hints of a Narrowing of the FTC’s Section 5 Authority Under a Trump Presidency

The transition of power from President Barack Obama to President-Elect Donald Trump is underway.  Although President-Elect Trump did not lay out specific policy prescriptions about data privacy or consumer protection during his candidacy, his recent choice of Dr. Joshua D. Wright to lead transition efforts at the Federal Trade Commission provides some hints as to the direction the agency may take under a Trump administration.

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DFS Cyber Regulation: Part II - An Interview with Bay Dynamics’ Steven Grossman

This is the second installment in our interview with Steven Grossman, VP Strategy & Enablement at Bay Dynamics, the cyber risk analytics company.  Here, Steven discusses the importance of aligning an institution’s risk profile with its cybersecurity plan and recommendations for bridging the gap between IT and the boardroom. 

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DFS Cyber Regulation: Changing the Rules - An Interview with Bay Dynamics’ Steven Grossman

As part of Patterson Belknap’s continuing focus on the New York Department of Financial Services (DFS) proposed cybersecurity regulation, we sat down with Steven Grossman, VP Strategy & Enablement at Bay Dynamics, a cyber risk analytics company, to talk about cybersecurity in a highly regulated environment.  In the first installment of our 2-part interview with Steven, he discusses implementation of the new regulation and the fact that organizations shouldn’t confuse regulatory compliance with effective cybersecurity planning and strategy.

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Law Firms and Vendors Mandated to Up Their Cyber Game: Final Installment in a 3-Part Series

This is our final installment in a three-part series examining the New York State Department of Financial Services (“DFS”) new cybersecurity regulation.  In this installment, we provide an overview of the regulation’s impact on third-party vendors and business partners, including law firms.

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Cyber Regulation Demands Board Accountability: Part 2 in a 3-Part Series

This is our second installment in a three-part series examining the New York State Department of Financial Services (“DFS”) new cybersecurity regulation.  In this installment, we provide an overview of the regulation’s impact on corporate governance and the scope of liability for corporate boards.

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