On January 3, 2020, the Division of Swap Dealer and Intermediary Oversight (DSIO) of the U.S. Commodity Futures Trading Commission (CFTC) issued two cyber threat alerts regarding the hacking of approximately one dozen cloud service providers, as described in a Wall Street Journal article published December 30, 2019, entitled “Ghosts in the Clouds: Inside China’s Major Corporate Hack.”
One DSIO cyber threat alert was directed to swap dealers (SDs) and futures commission merchants (FCMs). Another was directed to commodity pool operators (CPOs), commodity trading advisors (CTAs), introducing brokers (IBs) and retail foreign exchange dealers (RFEDs). The National Futures Association (NFA) then sent a blast email to all NFA members in these registration categories (on behalf of the CFTC), with the DSIO alerts attached, further emphasizing to NFA members the information requested by DSIO and the deadlines for providing such information.
There has been a spike in 2019 of targeted cyberattacks against Asia-based fund managers, especially those in a startup phase of business. Regulators worldwide, including the Securities and Futures Commission of Hong Kong, have issued guidelines for reducing and mitigating hacking risks. This post summarizes the practical measures that may be adopted to protect your firm against cyberattacks and the keys to successful crisis management in the event that an unauthorized data breach occurs. (more…)
On December 3, 2019, the five federal banking agencies1 issued a joint statement (the “Joint Statement”) regarding the use of alternative data for credit underwriting. The Agencies highlighted potential benefits that may arise from the use of alternative data, including the ability to make faster and more accurate credit determinations and the potential to provide credit at a lower rate or to individuals or small businesses that would otherwise be unable to access it. While the Agencies issued approving language regarding the use of certain types of alternative data, they also cautioned that the use of alternative data may have consumer protection implications, including fair lending, prohibitions against unfair, deceptive or abuse acts or practices and the Fair Credit Reporting Act.
On October 11, 2019, the leaders of the U.S. Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN) and the U.S. Securities and Exchange Commission (SEC) (together, the Agencies) issued a joint statement highlighting the application of anti-money laundering and countering the financing of terrorism (AML/CFT) obligations under the Bank Secrecy Act (BSA) to persons engaged in activities involving digital assets (Joint Statement). On the same day, the SEC filed an emergency action to halt a digital asset distribution, citing BSA/AML concerns.1
With less than three months to go before amendments to California’s far reaching data privacy law need to be signed into law, the CCPA landscape may be changing yet again, as several amendments debated in the state Senate Judiciary Committee on July 9th underwent significant modifications. Eight proposed CCPA amendments were on the committee’s agenda, and several were hotly debated in an hours-long session that extended late into the night. In the end, two of the bills had substantive modifications, another was stalled, one was defeated, and the rest made it out of the committee, with limited changes. Here we summarize the highlights.
Data aggregators and fintech providers are now offering services that let consumers manage their finances using information from multiple accounts at multiple financial institutions. This kind of consumer data access raises serious questions about the relationship between financial institutions and consumer-designated third parties. This webinar will cover the risks that come with consumer-permissioned information sharing, current gaps and solutions in the existing legal framework to address these risks and issues that can be addressed contractually between various stakeholders.
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.
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.
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.