On April 10, 2019, the Department of Justice (“DOJ”) released a white paper titled Promoting Public Safety, Privacy, and the Rule of Law Around the World: The Purpose and Impact of the CLOUD Act. This white paper is the first official DOJ statement about the Clarifying Lawful Overseas Use of Data Act (“CLOUD Act”) and reflects the DOJ’s current perspective on its scope and implications. Below we summarize the CLOUD Act and discuss the DOJ’s key observations. Continue Reading DOJ Releases White Paper Addressing Scope & Implications of CLOUD Act
On March 27, 2019, journalists affiliated with Reuters reported that the Kunlun Group (“Kunlun”), a China-based tech firm, was preparing to sell its wholly owned subsidiary, Grindr, after the Committee on Foreign Investment in the United States (“CFIUS”) informed the group that Kunlun’s continued ownership of Grindr constituted a national security risk. This forced divestiture of Grindr is a pointed reminder that CFIUS remains focused on protecting the sensitive personal data of U.S. citizens, has the power to upend closed deals that have not been cleared by the committee, and is dedicating increased resources to the review of transactions that are not notified to CFIUS. Continue Reading CFIUS Forces Kunlun to Unwind 2016 Acquisition of Grindr Over Concerns About the Protection of Sensitive Personal Data
On April 3, 2019, staff of the Securities and Exchange Commission released (1) a framework providing principles for analyzing whether a digital asset constitutes an investment contract, and thus a security, as defined in SEC v. W.J. Howey Co. and (2) a no-action letter permitting TurnKey Jet, Inc., without satisfying registration requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934, to offer and sell “tokenized” cards that are recorded on a permissioned blockchain and can be used for the limited purpose of purchasing air charter services.
The framework and no-action letter are a logical expansion of prior SEC statements and actions applying Howey to digital assets, but raises important interpretative issues for newly issued digital assets.
Please click here to read the full alert memorandum.
On March 20, 2019, in Frank v. Gaos, the Supreme Court remanded a case challenging Google’s practice of disclosing users’ search terms to third parties, directing the lower courts to address whether class plaintiffs had Article III standing to bring the privacy action in light of Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). Frank v. Gaos was originally notable because it had been resolved by a cy pres-only class action settlement, which had been appealed by objecting class members as inconsistent with Federal Rule of Civil Procedure 23. As part of the remand, the Court vacated the settlement without opining on its validity. Continue Reading Supreme Court Vacates Approval of Class Action Settlement and Remands to Determine Article III Standing in Data Privacy Case
On Friday, March 15, 2019, the U.S. Federal Trade Commission (“FTC”) issued its 2018 Privacy & Data Security Update (the “Update”) detailing its activities last year in seven “zones” of privacy and data security: enforcement, advocacy, rules, workshops, reports and surveys, consumer education and business guidance, and international engagement. Continue Reading Federal Trade Commission Issues 2018 Privacy and Data Security Update
On 12 February 2019, the European Data Protection Board (“EDPB”) adopted its first opinion on an “administrative arrangement,” which provides a new mechanism for the transfer of personal data between European Union (“EU”) financial supervisory authorities and securities agencies and their non-EU counterparts.
Under the EU’s General Data Protection Regulation 2016/679 (“GDPR”), personal data cannot be transferred from the European Economic Area (“EEA”) to a third country unless the European Commission has decided that such third country is “adequate” from a data protection laws perspective, or “appropriate safeguards” are in place to ensure that the treatment of personal data in the hands of the recipient reflects the GDPR’s high standards. Article 46 of the GDPR provides for various safeguarding options, including the possibility of “provisions to be inserted into administrative arrangements between public authorities or bodies which include enforceable and effective data subject rights.” No such “administrative arrangements” have been approved by the EDPB until now. Continue Reading EDPB Issues First Opinion on Administrative Arrangements Under the GDPR for Cross-Border Data Flows Between EU and Non-EU Securities Agencies
In summer 2018, a new Indian Personal Data Protection Bill was released by a Committee of Experts formed under the Chairmanship of Justice B.N. Srikrishna (the “Bill”), accompanied by a report titled “A Free and Fair Digital Economy: Protecting Privacy, Empowering Indians.” After several months’ hiatus, reports are emerging of renewed impetus from India’s Ministry of Electronics and Information Technology (“MEITY”) for the Bill to be put before Parliament.
The proposed introduction of the Bill continues a global trend in the revision of data protection laws: from California to Canada, from Bahrain to Brazil, many jurisdictions have recently proposed, or are in the process of adopting, new, stricter data protection legislation that, to varying degrees, bears the hallmarks of the recently-effective EU General Data Protection Regulation (“GDPR”).
As the global data protection map evolves, what should multinational organisations do to remain compliant? National legislatures are contributing to a global patchwork of data protection policy and each new law has been shaped by different political and cultural motivations. Consequently, areas of incompatibility between regimes are becoming visible.
This article recaps on the key provisions of the proposed Bill, examines potential incompatibilities with the GDPR, and concludes with what this means for multinational organisations who may be required to navigate both frameworks.
Please click here to read the full article.
On January 24 2019, Canada’s Office of the Superintendent of Financial Institutions (“OSFI”) released an Advisory detailing new requirements for Canadian federally regulated financial institutions (“FRFIs”) to report cyber incidents within 72 hours. FRFIs include banks, trust companies, loan companies, life insurance companies, property and casualty insurance companies, and fraternal benefit societies.
The new reporting requirements become effective on March 31, 2019. Continue Reading Canadian Financial Regulator Publishes New Cyber Incident Reporting Guidelines Effective March 2019
On February 20, the Securities and Exchange Commission (the “SEC” or “Commission”) issued a cease-and-desist order against Gladius Network LLC (“Gladius”) concerning its 2017 initial coin offering (“ICO”). The SEC found that the Gladius ICO violated the Securities Act of 1933’s (“Securities Act”) prohibition against the public offer or sale of any securities not made pursuant to either an effective registration statement on file with the SEC or under an exemption from registration. While this is far from the first time that the SEC has found that a particular ICO token meets the definition of a “security” under the Securities Act, this is notably the first action involving an ICO token issuer that self-reported its potential violation. Due to this, and Gladius’s cooperation throughout the investigation, the SEC stopped short of imposing any civil monetary penalties among its ordered remedial measures. Continue Reading SEC Issues First ICO Enforcement Action Against a Self-Reporting Token Issuer
On February 7, 2019, the German antitrust agency, the Federal Cartel Office (“FCO”), imposed limitations on Facebook’s current practice of collecting and processing user data and prohibited using the related terms of service. After an almost three-year long investigation, the FCO found that some of Facebook’s business practices amounted to an abuse of a dominant position. For the first time, the FCO based its abuse-of-dominance analysis also on whether the dominant company complied with the GDPR – throwing compliance with the GDPR into their competition law assessment. Continue Reading Germany Limits Facebook’s Data Collection and Processing, Refers to GDPR