U.S. Employers Need to Reconsider Use of Confidentiality and Nondisparagement Provisions in Light of New NLRB Decision
Employers frequently seek to include confidentiality and nondisparagement provisions in severance agreements provided to departing employees. Last week, the U.S. National Labor Relations Board (NLRB or Board) significantly altered the legal landscape governing such provisions, making it much more difficult for unionized and nonunionized employers alike to use them for nonsupervisory employees without running afoul of the National Labor Relations Act (NLRA). The decision is likely to be appealed, and we will issue updates as they become appropriate. In the interim, however, it is critically important for employers to understand the implications of the decision (see below) and to adjust their use of these provisions to limit their risk.
New FTC Guidance for Mobile Health Apps
Healthcare providers, health plans, and technology companies that use mobile health apps to access, collect, share, use, or maintain information related to an individual’s health should take note of the recently issued Federal Trade Commission (FTC) Mobile Health App Interactive Tool. The purpose of the tool is to help mobile health developers determine the federal regulatory, privacy, and security laws and regulations that may apply to the use of a consumer’s health information, such as information related to diagnosis, treatment, fitness, wellness, or addiction. While the tool should not be considered legal advice and cannot guarantee compliance with legal requirements, it can help healthcare providers, health plans, and technology companies issue-spot to manage risk in this heavily regulated space.
FINRA Issues 2023 Report on Its Examination and Risk Monitoring Program
On January 10, 2023, the Financial Industry Regulatory Authority (FINRA) published its 2023 Report on its Examination and Risk Monitoring Program (the Report).1 The 75-page Report includes four new topic areas for 2023: (1) manipulative trading, (2) fixed income — fair pricing, (3) fractional shares — reporting and order handling, and (4) Regulation SHO.
Unpacking Digital Data Laws Across Europe: Addressing the Digital Markets Act
The EU Digital Markets Act (DMA) is set to revolutionize the way in which so-called ‘Big Tech’ is regulated in the EU, shifting toward ex-ante rulemaking and away from traditional after-the-fact enforcement. The DMA imposes a stringent regulatory regime on large online platforms (so-called “gatekeepers”) and gives the European Commission (Commission) new enforcement powers, including an ability to impose severe fines and remedies for noncompliance.
Digital Health Transformation: A Practical Guide for Life Sciences Companies
In 2022, many if not most pharmaceutical, medical device, and other life sciences companies established strategies to innovate digital health technology complementary to their existing strategic focus. The digital transformation of the life sciences industry is still widely unfolding across the marketplace. In 2023 and beyond, the race is on to launch the next generation of digital health technologies to innovate the delivery of therapies to patients.
EU Publishes New NIS2 Cyber Directive Imposing Liability and Obligations on Senior Management
On 17 January 2023, the new Network and Information Systems Security Directive (“NIS2 Directive”), which is aimed at establishing a minimum level of cybersecurity standards across the EU and is set to replace its predecessor (the NIS or “NIS1 Directive”), entered into force. The new NIS2 Directive aims to further harmonize and strengthen cybersecurity and resilience throughout the EU in response to a continued increase in digitization and rise in cyber (and in particular ransomware) threats – which is estimated to have reached a total cost of €5.5 trillion at the end of 2020 (double the figure of 2015) and continues to rise in the EU and globally notably due to ongoing geopolitical conflicts in Ukraine and Russia. (more…)
Preparing Your 2022 Form 10-K: A Summary of Recent Key Disclosure Developments, Priorities, and Trends
This Sidley Update highlights certain key disclosure considerations for preparing your annual report on Form 10-K for fiscal year 2022, including recent amendments to U.S. Securities and Exchange Commission (SEC) disclosure rules and other developments that impact 2022 Form 10-K filings, as well as certain significant disclosure trends and current areas of SEC focus for disclosures. As always, we invite you to contact us with any questions on these topics or any other SEC reporting and compliance matters.
Broker-Dealers and Investment Advisers Should Double-Check Their “Identity Theft” Programs: SEC Division of Examinations Issues Risk Alert on SEC’s Identity Theft Red Flags Rule, Regulation S-ID
On December 5, 2022, the Division of Examinations of the Securities and Exchange Commission (SEC) released a Risk Alert discussing its observations on Regulation S-ID (Reg. S-ID) from recent examinations of SEC-registered investment advisers and broker-dealers. Reg. S-ID, the SEC’s implementation of the identity theft red flags rule, requires SEC-regulated financial institutions and creditors to develop and implement an identity theft prevention program (Program) with written policies and procedures that are updated periodically. The requirements for the Program are outlined in the text of Reg. S-ID, and there are guidelines in Appendix A to assist firms in creating and maintaining a compliant Program. As Reg. S-ID applies to both SEC and Commodity Futures Trading Commission-regulated entities, financial institutions and creditors should consider their compliance programs accordingly.
NY DFS Proposes New Class of Entities and More Detailed Regulations in Second Amendment to Cybersecurity Regulations
On November 9, 2022, the New York Department of Financial Services (DFS) published its proposed second amendment to its cybersecurity regulations (23 NY CRR Part 500). This proposal follows a July 29 pre-proposal and comment period. The amendment is available for a sixty-day comment period – until January 9, 2023 – after which the agency may adopt final regulations or issue a further revised version.
Drizly FTC Order Introduces Significant Minimization, Deletion and Retention Requirements
On October 24, 2022, the Federal Trade Commission (“FTC”) issued an order (the “Order”) against the online alcohol marketplace, Drizly, and its CEO, James Cory Rellas, alleging security failures that resulted in a data breach exposing the personal information of approximately 2.5 million consumers. In reaching this conclusion, the FTC alleges that Drizly failed to implement reasonable safeguards to protect the personal information it collected and stored, such as, two-factor authentication for GitHub, access controls for personal data, sufficient written security policies, and appropriate employee training regarding security.