Category

Cybersecurity

03 June 2019

Recent Risk Alerts by SEC OCIE Highlight Privacy and Cybersecurity Issues in Examinations

The SEC’s Office of Compliance Inspections and Examinations (OCIE) released two Risk Alerts, on April 16, 2019 and May 23, 2019, highlighting the importance of privacy and cybersecurity compliance for SEC-registered investment advisors and broker-dealers under Regulation S-P. As previously covered on Data Matters, OCIE has consistently identified cybersecurity as one of its main areas of focus for examinations.

Indeed, cybersecurity was once again identified by OCIE in its 2019 National Exam Program Examination Priorities (2019 Exam Priorities), which placed a particular emphasis on proper configuration of network storage devices, information security governance, and policies and procedures related to retail trading information security.  With the issuance of the April 16 and May 23 Risk Alerts, OCIE has provided additional detail regarding specific issues that SEC-registered entities should focus on to mitigate privacy and cybersecurity risk, as well as to prepare for examinations.

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31 May 2019

GDPR: One Year On

The 25th of May, 2019 marked a year since the EU General Data Protection Regulation (“GDPR”) came into force. For most in privacy, involvement with the GDPR has been ongoing for well over this year, but on the first anniversary of the GDPR we take an opportunity to look back and reflect on where we are now in relation to some key areas of interest including enforcement action, privacy litigation, breach notification and developing guidance from the European Data Protection Board (“EDPB”).

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22 May 2019

Trump Executive Order May Significantly Disrupt Technology Supply Chains

On May 15, 2019, President Donald Trump signed an executive order (EO) declaring a “national emergency” related to certain threats against information and communications technology and services (ICTS) in the United States and authorizing the Department of Commerce to block transactions that involve ICTS with a “foreign adversary.” The EO provides for the possibility of a licensing regime that could allow transactions that would otherwise be blocked. The EO is available here.

The EO itself does not mention any particular countries or companies that would be subject to its prohibitions. However, the EO is widely reported to be aimed at China. Indeed, tensions between the United States and China have intensified over the past week, after negotiations between the two governments to resolve their trade dispute stalled.

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02 May 2019

Washington State Comprehensive Privacy Bill Loses Steam, Data Breach Law Amendment Heads to Governor’s Desk

As the legislative session drew to a close, what once seemed like an inevitability suddenly looked unlikely.  The Washington Privacy Act, SB 5376/HB1854, failed to make its way through the legislative process.  The Bill’s sponsor, Sen. Reuven Carlyle, called the game on April 17, tweeting that despite the “unprecedented 46-1 vote” in the Senate, “[u]nfortunately, House failed to pass privacy legislation this year.  We’re committed to 2020.”  Nevertheless, the State of Washington did pass notable privacy legislation, albeit on a more narrow topic.

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19 March 2019

Important Changes to the Singapore Data Privacy Regime

Singapore may soon mandate data breach notifications and data portability via amendments to the Singapore Personal Data Protection Act, or PDPA. The PDPA applies to all organizations that collect, use and disclose data in Singapore, and the PDPA has extraterritorial effect as it applies to all organizations collecting, using or disclosing personal data from individuals in Singapore (whether or not the company  has a physical presence in Singapore).

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12 March 2019

FTC Seeks Comment on Proposed Changes to its GLBA Safeguards and Privacy Rules

Over the last few years, States have enacted increasingly aggressive legislation concerning data privacy and security, raising concerns that companies will be subject to a patchwork of different standards.  Congress has recently taken notice, convening hearings on potential federal privacy legislation, with the possibility of preemption a hot topic during the hearings.  Last week, the Federal Trade Commission (“FTC”) got into the act as well, releasing two notices of proposed rulemaking (“NPRM”) on potential changes to its the Standards for Safeguarding Customer Information (“Safeguards Rule”) and Privacy of Consumer Financial Information Rule (“Privacy Rule”) under the Gramm-Leach-Bliley Act.  The proposed amendments – and particularly the proposed changes to the Safeguard Rule – signal the FTC’s desire to align its rules with those of key states and to further protect customer information held by financial institutions.

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28 February 2019

FCA Publishes Wholesale Banks and Asset Management Cyber Multi-Firm Review Findings

The UK Financial Conduct Authority (“FCA”) has carried out a multi-firm review of cybersecurity practices with a sample of 20 firms in the wholesale banking and asset management sectors (the “Report”). The review aimed to look more closely at how wholesale banking and asset management firms oversee and manage their cybersecurity, including the extent to which firms identify and mitigate relevant cyber risks and their current capability to respond to and recover from data security incidents.

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26 February 2019

NERC $10,000,000 Fine of Public Utility Highlights the Need for Cybersecurity Preparedness and CIP Compliance Programs

On January 25, 2019, the North American Electric Reliability Corporation (“NERC”) asked the Federal Energy Regulatory Commission (“FERC”) to approve a settlement issuing a record $10 million fine against an unidentified utility resulting from violations of critical infrastructure protection standards (“CIP”) occurring mostly between 2015 and 2018 (referred to hereafter as the “Settlement Agreement”).  Although none of the violations resulted in any reported outages, NERC concluded that the cumulative effect of the violations posed a serious risk to the reliability of the bulk U.S. power grid because “many of the violations involved long durations, multiple instances of noncompliance, and repeated failures to implement physical and cyber security protections.” Settlement Agreement at 12.

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11 February 2019

Michigan Adopts National Association of Insurance Commissioners’ (NAIC) Insurance Data Security Model Law

On December 28, 2018, Michigan adopted the National Association of Insurance Commissioners’ (NAIC) Insurance Data Security Model Law in the form of Michigan H.B. 6491 (Act). By doing so, Michigan joins Ohio and South Carolina as the third state to adopt the Model Law and the fifth state – along with Connecticut and New York – to have enacted cybersecurity regulations focused on insurance companies. See CT Gen Stat § 38a-999b (2015); 23 NYCRR 500. (Please see our prior coverage for more information on Ohio and South Carolina’s adoption of the Model Law).  Moreover, adoption of the Model Law is still gaining steam with Rhode Island potentially next in line.

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06 February 2019

First Multistate HIPAA Data Breach Lawsuit May Signal Increased State Interest in Data Security Enforcement

On December 3, 2018, twelve attorneys general (“AGs”) jointly filed a data breach lawsuit against Medical Informatics Engineering and its subsidiary, NoMoreClipboard LLC (collectively “the Company”), an electronic health records company, in federal district court in Indiana.  See Indiana v. Med. Informatics Eng’g, Inc., No. 3:18-cv-00969 (N.D. Ind. filed Dec. 3, 2018).  The suit—led by Indiana Attorney General Curtis Hill—is joined by AGs from Arizona, Arkansas, Florida, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Nebraska, North Carolina and Wisconsin.  While state AGs have previously exercised their civil enforcement authorities under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), this is the first multi-state data breach lawsuit alleging HIPAA violations in federal court and may signal increased interest on the part of state officials in exercising their data protection authorities to address cybersecurity incidents.

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