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….”
Hedge funds and broker dealers can expect their cybersecurity preparedness to come under scrutiny again this year by federal securities regulators.
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.
Today, Reuters reported that the New York Department of Financial Services (“DFS”) will delay the effective date of its new cybersecurity regulation. According to a “person familiar with the matter,” the DFS will publish a new version of the cyber security regulation on December 28, 2016, and the effective date for the rule will now be March 1, 2017.
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.
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.
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.
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.
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.
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.
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.
This is the first installment in a three-part series examining the New York State Department of Financial Services (“DFS”) new cybersecurity regulation. The Patterson Belknap Privacy and Data Security Team has studied the regulation, its legislative and regulatory underpinnings, and practical consequences.
The fight between the Federal Trade Commission and LabMD, the defunct medical testing lab, entered a new chapter late yesterday. In a 13-page ruling, the U.S. Court of Appeals for the Eleventh Circuit said that LabMD’s appeal presented “a serious legal question” as to the Commission’s interpretation of Section 5 of the FTC Act and that any enforcement of the agency’s order should be stayed until the appellate process had run its course.
The Financial Crimes Enforcement Network, or FinCEN, an arm of the United States Department of the Treasury, issued an advisory last week to remind financial institutions of their obligations to report cyber-events on Suspicious Activity Reports (SARs). While FinCEN emphasizes that its advisory does not change existing reporting requirements, it goes to lengths to discuss its “expectations” about what and how information will be reported when it comes to cybersecurity events.
Bank regulators are continuing to demand more accountability from corporate leaders when it comes to compliance with cybersecurity safeguards.
As New York public schools increase the use of technology in day-to-day operations and in the classroom, they increasingly face data management and data security threats similar to those faced by businesses and non-profit institutions.
On July 21st, Patterson Belknap and Berkeley Research Group hosted a Practising Law Institute (PLI) briefing on law firm cybersecurity.
FTC Slaps Down ALJ’s Data Security Ruling in LabMD, Sets Broad Mandate for Protection of “Sensitive” Consumer Data
In a sweeping statement of its data security expectations for organizations that maintain consumer information, the Federal Trade Commission on Friday found that LabMD, the defunct medical testing lab, failed to employ adequate data security safeguards in violation of Section 5 of the FTC Act, even though there was no indication that any information had been misused or compromised.
Last week, the U.S. Department of Homeland Security (“DHS”) and the U.S. Department of Justice (“DOJ”) provided guidance on an open question in the Cybersecurity Information Sharing Act (“CISA”): What type of information may companies share under CISA?
The Federal Trade Commission has decided to put off until late July a decision about whether to overturn a ruling by the agency’s chief administrative law judge in the closely watched data security action against LabMD, the Atlanta-based medical detection firm. In a one-paragraph order issued late yesterday, the Commission extended the deadline for decision until July 28th “in order to give full consideration to the issues presented by the appeal in this proceeding.”
We have recently written about the increasing importance of cybersecurity as an aspect of risk management for nonprofits in light of the proliferation of data security breaches across different sectors.
The U.S. International Trade Commission (“ITC”) last week launched an investigation into United States Steel Corporation’s (“U.S. Steel”) complaint that Chinese hackers stole trade secret information—including proprietary methods for making lightweight steel—on behalf of Chinese steel producers.
The chair of the U.S. Securities and Exchange Commission warned that cybersecurity is the biggest risk facing our financial system today. At an industry conference yesterday, SEC Chair Mary Jo White said that major exchanges, clearing houses and other players in the financial system did not have cyber defenses in place that aligned with the risks they faced.
Come Back With a Warrant: Proposed Rule Change Expands the Government’s Ability to Access Electronically Stored Information in Criminal Investigations
On April 28, 2016 the United States Supreme Court proposed a modification to Federal Rule of Criminal Procedure 41 that significantly alters the manner in which the government can obtain search warrants to access computer systems and electronically stored information that will no doubt have an effect on hackers and hacking victims alike. The modification will go into effect on December 1, 2016, barring Congressional intervention.
A contentious legal battle over data security between the Federal Trade Commission and LabMD, a small medical testing lab, is chronicled in the latest edition of Bloomberg Businessweek. Dune Lawrence’s report raises lingering questions about the FTC’s prosecution of a now-defunct company, tampered evidence and regulatory overreach.
Recent surveys tell us that cybersecurity is the top risk faced by corporate America. The Bank Director’s 2016 Risk Practices survey – out yesterday – disclosed that three quarters of bank executives and board members believe cybersecurity is their top concern. And their general counsel agree. In another recent study, general counsel said that cybersecurity was their top area of organizational risk as well.
Faced with the prospect of overturning a decision by one of its own administrative law judges, the Federal Trade Commission on Tuesday explored ways in which to render a narrow decision. The argument was the most recent chapter in the long running data security enforcement action against LabMD, the now defunct medical testing laboratory.
U.S. v. Microsoft - What you need to know about one of the most important privacy cases of the decade
The U.S. Court of Appeals for the Second Circuit has in its hands one of the most closely-watched privacy cases in recent memory. U.S. v. Microsoft addresses an issue of critical importance to U.S. businesses — whether companies must comply with orders from the U.S. government to turn over electronic data, even when that data is stored on a server outside of the U.S. A ruling is expected any day.
Earlier today, President Obama issued an Executive Order creating a Commission on Enhancing National Cybersecurity within the Department of Commerce. The commission “will make detailed recommendations to strengthen cybersecurity in both the public and private sectors while protecting privacy, ensuring public safety and economic and national security, fostering discovery and development of new technical solutions, and bolstering partnerships between Federal, State, and local government and the private sector in the development, promotion, and use of cybersecurity technologies, policies, and best practices.”
Yet another regulator has weighed in on cybersecurity issues, adding to an already complicated and daunting mosaic of regulatory enforcement actions and guidance. Last week, the U.S. Food and Drug Administration (“FDA”) posted new draft guidance concerning the postmarket management of cyber risks associated with medical devices that are connected to networks. The new draft guidance comes almost a year after President Obama issued Executive Order 13636, which directs public and private actors to work together to share information about cybersecurity.
After several fits and starts, Congress finally passed the Cyber Information Sharing Act of 2015 (CISA) as part of the omnibus budget bill. President Obama signed the bill into law on December 18, 2015.
The U.S. Department of Homeland Security’s (DHS) top privacy official said today that a “clear mandate” from top management is the foundation of an organization’s ability to establish and implement an effective data security and privacy plan.
At a panel during last week’s Consumer Electronics Show in Las Vegas, Edith Ramirez, chair of the Federal Trade Commission – America’s top privacy regulator – said she would not wear a Fitbit personal fitness tracker. “I don’t want my sensitive health information being shared,” she explained. And as it happens, Fitbit suffered a hack the same week. Meanwhile, U.S. healthcare regulators have recently been promoting policies that promise to aggregate and render more accessible the health data of millions – whether that data comes from consumers using personal health devices like Fitbit or patient visits to doctors or hospitals.
Not surprisingly, cybersecurity remains a top examination priority for the Comptroller of the Currency (“OCC”). And that means national banks and federal savings associations – and their leadership teams – should be prepared for “heightened” focus by OCC examiners in critical areas of cybersecurity risk including banks’ third-party and vendor relationships.
The legal wrangling between the Federal Trade Commission and LabMD, Inc. over data security continues.
On December 22, 2015, the FTC filed its appeal brief challenging Chief Administrative Law Judge (“ALJ”) D. Michael Chappell’s November 13, 2015 decision (the “Initial Decision”) dismissing the FTC’s complaint against LabMD, a now-defunct clinical testing laboratory alleged to have compromised the personal information of its customers. The appeal, which will be presented to the full Commission, was expected, as the FTC previously filed a Notice of Appeal shortly before Thanksgiving.
Last month’s terror attacks in Paris have re-ignited the long-standing debate between national security and privacy advocates over whether technology companies should be required to provide the government special access to encrypted communications that travel on the internet, such as instant messages.
Last month, the Federal Trade Commission’s Chief Administrative Law Judge dismissed the Commission’s long-running data security case against LabMD because it failed to prove that there was an actual or reasonably imminent threat of injury to consumers. In the matter of LabMD, Dkt. No. 9357, Initial Decision (Nov. 13, 2015). The issue of consumer “injury” has loomed large in the world of data privacy litigation since private plaintiffs began bringing class action lawsuits arising from data breaches. Whether those cases are brought by individuals in their own name or on behalf of a putative class, courts have struggled with the question of what constitutes injury sufficient to successfully prosecute a claim.
Earlier this month, the New York State Department of Financial Services (“DFS”) announced that it will propose new cybersecurity regulations for financial institutions. The DFS made the announcement in a letter to the Financial and Banking Information Infrastructure Committee — an eighteen member organization headed by the Treasury Department that has already begun tackling cybersecurity issues.
In a long-running and highly contentious data security enforcement action against LabMD, a small medical testing laboratory, the Federal Trade Commission was handed a stunning defeat late Friday. In a 92-page Initial Decision, Chief Administrative Law Judge D. Michael Chappell dismissed the FTC’s case against LabMD – after a full administrative trial – based on the Commission’s failure to prove it was “likely” that consumers had been substantially injured in two alleged data security incidents dating back nearly seven years.
Reacting to the influx of recent, high-profile data breaches and cybersecurity attacks in the government and the private sector, the U.S. Senate earlier this week passed the controversial Cybersecurity Information Security Act of 2015 (“CISA”), S. 754. The bill, which came after more than four years of handwringing and debate, received bipartisan support and passed by an overwhelming majority vote of 74 to 21.
Workplace privacy has become an increasingly challenging issue for employees and employers alike. With technological advancements, employers have enhanced visibility into employee behavior including their use of company resources such as the Internet. The same advancements have also afforded employees with unprecedented access to a company’s confidential and proprietary information.
Self-defense is a natural, almost reflexive human instinct. But it has a complicated history in American law, full of contradiction and compromise. Many jurisdictions have long recognized that an otherwise illegal act—such as taking a swing at a purse-snatcher—may be justifiable (and therefore legally permissible) in the context of fending off a physical threat or attack. But victims of cyber-attacks—who may be tempted to “hack back”—have yet to enjoy such a privilege. In fact, following through on this natural instinct in cyberspace could lead to criminal and civil liability.
Following yesterday’s news that Experian Plc, the world’s largest consumer credit monitoring firm, suffered a massive data breach, exposing the personal information of some 15 million people, the post-breach fall out has already started. The Connecticut Attorney General’s office has announced that is launching an investigation into the breach.
Federal and state cybersecurity agencies teamed up last week for a two-day summit focused on the evolving nature of cybersecurity threats to New Jersey businesses. The event was sponsored by the U.S. Department of Homeland Security’s (“DHS”) Critical Infrastructure Cybersecurity Voluntary Program and The New Jersey Office of Homeland Security and Preparedness.
In a 90-minute hearing earlier today, Microsoft Corp. asked the Second Circuit Court of Appeals to reverse a district court decision forcing the technology giant to turn over customer email traffic residing on a server in Ireland. American companies with data centers located outside the U.S., as well as privacy advocates and media organizations are closely watching this case. During the argument, the Court acknowledged that the “implications of its ruling would be broad.”
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