Companies with robust cybersecurity programs may still be vulnerable to attack. A new, first-of-its-kind law in Ohio now recognizes this fact. On November 1, 2018, the Ohio Data Protection Act (SB 220) establishes a safe harbor from state tort actions in data breach cases for entities that have developed an information security program with “administrative, technical, and physical safeguards for the protection of personal information and that reasonably conforms to an industry recognized cybersecurity framework.” Without establishing minimum cybersecurity standards, the Ohio law affords defendants an “affirmative defense” against state tort actions and establishes an important precedent that may serve as a model for other states and the federal government to follow. (more…)
A string of Governmental announcements have increasingly sounded the alarm about the growing cybersecurity threat facing the energy sector. Among other things, these reports have announced that state-sponsored cyber actors have successfully gained access to the control rooms of utilities. The hackers, one of the reports notes, could have used such access to cause blackouts.
On October 16, 2018, the U.S. Securities and Exchange Commission (SEC) took the unusual step of issuing a Report of Investigation cautioning public companies that they should consider cyber threats and related human vulnerabilities when designing and implementing their internal accounting controls. The report is an outgrowth of an investigation conducted by the SEC’s Enforcement Division into whether certain public companies that were victims of cyber fraud complied with the federal securities laws requiring public companies to implement and maintain internal accounting controls. The controls provided by these provisions must be sufficient to provide reasonable assurances that transactions occur (e.g., purchasing equipment), and access to assets is permitted (e.g., checking accounts, warehouses), only in accordance with management’s authorization.
Former Department of Homeland Security Chief Privacy Officer Hugo Teufel III and Sidley’s Edward McNicholas addressed a packed room on Chinese Cybersecurity Law at the 2018 Privacy + Security Forum hosted at George Washington University. The timely presentation highlighted how, with significant attention in the past few years focused on the GDPR, many have not fully appreciated the significant policy and legal developments coming out of Beijing. In particular, China has been creating a materially different approach to cybersecurity which serves the central purpose of defending the Chinese notion of cyber sovereignty. Much uncertainty remains about the newly-effective laws and regulations, but it is clear that foreign technology and other companies operating in China should rapidly focus on its significant restrictions on outbound data transfer, the expansive definitions of “important data”, as well as reviews of network equipment security. Their presentation is available here.
The Trump Administration continued to put its stamp on federal cybersecurity policy last week, as the White House issued its National Cyber Strategy while the Pentagon announced the Department of Defense Cyber Strategy. The former document is a helpful step forward that continues and advances the cyber policies the Trump Administration inherited from the Obama and Bush Administrations, while the Pentagon’s release primarily focused on the Strategy’s endorsement of “Defense Forward,” which was taken as a signal the United States would be adopting a more aggressive operational posture in the future. Data Matters readers will want to study both strategies, as each contains interesting insights into how the Trump Administration envisions the development of the cybersecurity ecosystem and see the public and private sectors working together to mitigate cyber risks. (more…)
An increasing number of eyes are now turning to the U.S. Congress to see how it will react to these developments, and Data Matters – and the privacy community generally – will thus be closely watching the Senate Committee on Commerce, Science, and Transportation on Wednesday, September 26, 2018, when it hosts a hearing titled “Examining Safeguards for Consumer Data Privacy.” (more…)
Vishnu Shankar, an associate in our London office, spoke with DataGuidance at the 2018 IAPP Data Protection Intensive. He discussed his recommendations on regulatory requirements regarding breach notification across several key pieces of legislation, including the GDPR and the NIS Directive, as well as sector-specific requirements.
Companies subject to New York’s Cybersecurity Regulation are acting quickly to finalize their compliance obligations as the fifth “due date,” September 4, 2018, quickly approaches.
By September 4, 2018, Covered Entities must ensure that their cybersecurity programs have in place certain additional safeguards:
- an audit trail that shows detection of and response to material cybersecurity events;
- written security procedures, guidelines, and standards for the development of in-house applications and for the evaluation and testing of externally developed applications;
- data retention policies and procedures for the disposal on a periodic basis of nonpublic information no longer necessary for business operations;
- risk-based policies, procedures, and controls to monitor the activity of authorized users and detect unauthorized access; and security controls, such as encryption, to protect non-public business relations and personal information.
Notably, for this upcoming deadline, Covered Entities that have received a limited exemption must still comply with the regulatory provision regarding data retention policies and procedures for the periodic disposal of nonpublic information. (more…)
On August 7, a group of regulators from 11 jurisdictions published a consultation (the Consultation) on the Global Financial Innovation Network (the GFIN), which aims to promote international cooperation on innovation and the use of technology in financial services (FinTech) and in regulatory processes (RegTech).
The group — which includes the U.S. Consumer Financial Protection Bureau, the UK Financial Conduct Authority (the FCA), the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) — is one of the first major collaborative efforts on FinTech and RegTech issues among regulators in developed financial services markets. The Consultation builds on the FCA’s proposal earlier this year to create a “global sandbox” for innovative financial services firms.
This post summarizes the proposed role of the GFIN, the issues on which its founding regulators are consulting and how these may affect financial services firms.
*This article first appeared in the July 2018 issue of Digital Health Legal
Massive data breaches. Threats to medical devices. The Internet of Persons. Healthcare entities are all too familiar with the rising cyber threat. But they are also familiar with the complex array of laws and regulations in the United States that attempt to address the threat and the potentially significant compliance costs and risks caused by that complexity. The US Court of Appeals for the Eleventh Circuit’s recent and long-awaited decision in LabMD v. Federal Trade Commission, which trimmed the sails of one of the primary regulators of the healthcare information security landscape, may thus appear to some, at first blush, to be a necessary corrective. Yet closer inspection shows that the Eleventh Circuit’s decision raises more questions than it answers – and that its true implications will only become clear once we see how federal regulators, the courts, and perhaps Congress respond.