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Alexis Collins’ practice focuses on litigation, including criminal and regulatory enforcement matters and complex civil and antitrust litigation.

On September 27, 2018, the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) filed parallel actions in federal court against an internet dealer that sold “contracts for difference” (CFD) based on securities and commodities margined with bitcoin.  The actions, which were assisted by the Federal Bureau of Investigation and the Department of Justice, signal continued coordination among federal agencies to police market activity involving financial transactions in cryptocurrencies. Continue Reading The CFTC and SEC Bring Charges Against International Securities Dealer for Bitcoin-Funded Swaps Activity

On September 26, 2018, a federal court in the District of Massachusetts found that virtual currencies are a commodity under the Commodity Exchange Act, 7 U.S.C. § 1 et seq, (“CEA”). This marks the second time that a court has accepted the Commodity Futures Trading Commission’s (“CFTC”) position and upheld the agency’s authority to regulate unleveraged and unmargined spot transactions in virtual currency under the agency’s anti-fraud and manipulation enforcement authority.  Most notably, however, the reasoning behind its decision potentially expands the scope of the CFTC’s oversight of the market. Continue Reading Second District Court Determines Virtual Currencies Are Commodities

Over the past year, the U.S Securities and Exchange Commission (“SEC”) has increasingly scrutinized initial coin offerings (“ICO”) and certain digital assets.  On September 20, 2018, the SEC’s Enforcement Division co-Director, Stephanie Avakian, gave a speech in which she addressed the Division’s approach to dealing with these new forms of tradeable assets.  This speech came only days after the SEC settled its first case charging an unregistered broker-dealer for facilitating the sale of digital tokens from several ICOs since the 2017 DAO Report.  In her speech, Avakian provided three key insights into the Division’s enforcement strategy. Continue Reading SEC Enforcement Division Co-Director Provides Insight Into Commission’s Approach to ICOs and Cryptocurrencies

On Tuesday, September 11, 2018, Judge Raymond J. Dearie of the Eastern District of New York issued a decision holding that Initial Coin Offerings (“ICO”) may qualify as securities offerings and therefore be subject to the criminal federal securities laws.  This ruling came as two U.S. regulators—the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”)—announced separate actions under securities laws against companies engaged in the cryptocurrency marketplace, including the sale of digital tokens.  As the popularity of cryptocurrencies grows and businesses and entrepreneurs increasingly turn to ICOs to raise capital, these developments may serve as guideposts for how cryptocurrencies and ICOs will be viewed by courts and federal regulators in cases to follow. Continue Reading Federal Court, SEC, and FINRA Scrutinize Cryptocurrencies and ICOs

On the heels of the European Union’s implementation of the General Data Protection Regulation (“GDPR”) and public outcry over the Cambridge Analytica scandal, on June 28, 2018, California enacted the most comprehensive data privacy law to date in the United States. The California Consumer Privacy Act of 2018 (the “CCPA”) was hastily passed by the California legislature to secure the withdrawal of an even more far-reaching measure that had qualified for the November ballot. Legislative amendments to the law are expected before it goes into effect on January 1, 2020.

The CCPA requires covered businesses to comply with requirements that give California consumers broad rights to know what personal information has been collected about them, the sources for the information, the purpose of collecting it, and whether it is sold or otherwise disclosed to third parties. It also gives consumers the right to access personal information about them held by covered businesses, to require deletion of the information and/or to prevent its sale to third parties. Other key provisions limit the ability of a covered business to discriminate against consumers who exercise their rights under the statute by charging them higher prices or delivering lower quality products or services.  The rights provided under the CCPA are similar in many respects to those afforded EU residents under the GDPR, but there are distinctions in approach on some key issues.

Please click here to read the full alert memorandum.

On June 27, 2018, Equifax Inc., the credit reporting agency, agreed to implement stronger data security measures under a consent order with the New York State Department of Financial Services (“NYDFS”) and seven other state banking regulators.[1] The order imposes detailed duties on Equifax’s Board of Directors in response to criticisms raised by the regulators during an examination of Equifax’s cybersecurity and internal audit functions.  The examination followed the company’s massive 2017 data breach, which exposed sensitive personal information of nearly 148 million customers.  Equifax agreed to the order without admitting or denying any charges of “unsafe or unsound information security practices.”

Continue Reading State Regulators Reach Settlement With Equifax in Connection With Massive Data Breach

On June 22, 2018, the United States Supreme Court decided Carpenter v. United States, in which it held that the government must generally obtain a search warrant supported by probable cause before acquiring more than seven days of historical cell-site location information (“CSLI”) from a service provider. Noting “the deeply revealing nature of CSLI, its depth, breadth, and comprehensive reach, and the inescapable and automatic nature of its collection,” the Court held that an individual “maintains a legitimate expectation of privacy in the record of his physical movements captured through CSLI” that warrants Fourth Amendment protection. While the Court sought to construe its decision narrowly, the reasoning of the majority and Justice Gorsuch in his dissent raise significant questions about whether and to what extent individuals may have a reasonable expectation of privacy or possessory interest in other sensitive personal data held by third parties beyond the CSLI at issue in Carpenter.

Please click here to read the full alert memorandum.

In recent years, the Federal Trade Commission (“FTC”) has taken the lead among federal agencies in regulating the cybersecurity practices of companies that handle consumer personal information.  The FTC has entered into numerous consent orders and other settlements with regulated companies that broadly require implementation and maintenance of information security programs that are “reasonably designed” to protect security and confidentiality of consumer information.  A federal appeals court has now cast doubt on the viability of such orders.  In a ruling issued on June 6, 2018, the Eleventh Circuit vacated a cease-and-desist order against LabMD, Inc. (“LabMD”) as unenforceable because it found that the order commanded an overhaul of the company’s data security program without providing a reasonably definite standard by which a court could determine compliance. Continue Reading Eleventh Circuit Vacates FTC Order Mandating Implementation of Cybersecurity Program

On April 18, 2018, government officials and cyber industry experts gathered in Washington, D.C., for the 2018 Incident Response Forum addressing legal and compliance challenges that arise following a data breach.  At the conference, representatives from the SEC, DOJ, FTC, and other federal and state enforcement agencies discussed their top data breach-related concerns and enforcement priorities.  Representatives spoke in their own capacity and were not making official agency statements, but their opinions can provide useful insight into agencies’ decision making processes and substantive views. Continue Reading Regulators and Law Enforcement Discuss Cyber Enforcement Priorities and Urge Cooperation Following Data Breaches

On April 12, 2018, the U.S. Federal Trade Commission (“FTC” or “Commission”) announced an agreement with Uber Technologies, Inc., to expand an August 2017 settlement regarding a 2014 data breach to include new violations arising from a second data breach that Uber discovered in 2016 but did not publicly disclose for over one year.  The revised settlement order imposes new notification, reporting, and records retention obligations on Uber for up to 20 years regarding third-party audits of its privacy program, future data breaches involving personal data, and its bug bounty program.  The proposed settlement order will be open for public comment for 30 days, after which time the Commission is likely to make the order final.

In August 2017, Uber entered into a consent agreement with the FTC related to a data breach that occurred three years before.  The complaint resolved by the 2017 settlement order alleged that, in May 2014, an intruder used an access key publicly posted on the website GitHub to access sensitive personal information of Uber drivers (who the FTC treats as consumers) that Uber stored with a cloud provider.  This information allegedly included unencrypted names, driver’s license numbers, bank account and routing numbers, and Social Security numbers.  The FTC alleged that Uber had failed to (1) “implement reasonable access controls” to safeguard personal data of drivers and riders stored in the cloud, (2) implement reasonable security training and guidance, (3) maintain a written security program, and (4) encrypt certain information stored with the cloud provider.  The complaint charged that Uber’s representations about the security of, and internal monitoring and auditing regarding access to, consumers’ personal information were false or misleading in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

In the 2018 complaint, the FTC alleges that Uber contemporaneously discovered a second data breach that had occurred in the fall of 2016—during the midst of the FTC’s nonpublic investigation into the 2014 breach.  According to the complaint, intruders used an access key that had been posted to a private repository associated with GitHub to download unencrypted files containing personal data of U.S. riders and drivers, including approximately “25.6 million names and email addresses, 22.1 million names and mobile phone numbers, and 607,000 names and driver’s license numbers.” Continue Reading Revised FTC-Uber data breach settlement to include second breach, criticize ‘bug bounty’ payment