While large financial institutions have traditionally been hesitant to enter new areas of financial products, particularly virtual assets, many more banks and companies have expressed interest in virtual currencies as cryptocurrency has become increasingly mainstream. Given the use of such services by terrorist groups, it is important for banks and other financial institutions to consider
Alexis Collins’ practice focuses on litigation, including criminal and regulatory enforcement matters and complex civil and antitrust litigation.
FTC to Corporate Boards: Mind Your Data Security
On April 28, 2021, the U.S. Federal Trade Commission (“FTC”) published a blog post reminding corporate boards of directors of their responsibility to oversee data security issues and ensure that consumer and employee data are protected. The FTC’s post is a continuation of its efforts to “elevate data security considerations to the C-Suite and Board level.”
By way of background, the FTC noted that it has continued to challenge companies’ data security practices on the grounds of allegedly deceptive or unfair conduct. The Commission is also actively reviewing certain data security rules targeted at safeguarding health records and consumer information held by financial institutions.…
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District Court Dismisses Securities Fraud Claim Against FedEx Concerning Disclosures About NotPetya Cyberattack
Last month, the United States District Court for the Southern District of New York granted a motion to dismiss in In re Fed Ex Corp. Securities Litigation, a putative class action securities fraud case filed against FedEx following numerous disclosures in 2017 and 2018 regarding the impact of a Russian cyberattack on its recently acquired subsidiary, TNT Express Services B.V (“TNT”). The court held that the complaint failed to adequately plead that FedEx had made any material misrepresentations or had the requisite scienter. FedEx’s successful defense against the lawsuit highlights the importance for companies to consider their disclosure obligations following a cyber-incident and carefully tailor their disclosures to account for their risks and accurately reflect the consequences of the incident.
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11th Circuit Rejects Standing Based on Heightened Risk of Identity Theft in Data Breach Suit
Last month, the Eleventh Circuit Court of Appeals dismissed claims brought in a putative class action seeking damages for disclosure of credit card information in a data breach resulting from a cyberattack. In I Tan Tsao v. Captiva MVP Restaurant Partners, LLC., the court held that the named plaintiff could not establish standing to sue based on allegations that the data breach created a “continuing increased risk of harm from identity theft and identity fraud” or that the plaintiff took affirmative steps to mitigate such potential harm.  This decision follows the reasoning set forth in the court’s recent en banc decision in Muransky v. Godiva Chocolatier, Inc, in which similar allegations were rejected as insufficient to support standing in a case seeking statutory damages from technical violations of the Fair and Accurate Credit Transactions Act, and adds to the circuit split on the issue.…
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OFAC Settles with Digital Currency Payment Processor for Sanctions Violations
On February 18, 2021, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) announced a $507,375 settlement with BitPay, Inc. (BitPay), a payment processor for merchants accepting digital currency as payment for goods and services, for 2,102 apparent violations of multiple sanctions programs between 2013 and 2018. The settlement highlights that financial service providers facilitating digital currency transactions must not only establish sanctions compliance programs to screen their own customers but also must monitor third-party non-customer transaction information.
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New York Department of Financial Services Issues New Guidance on Cyber Threats
Recently, the New York Department of Financial Services (“DFS”) issued two memoranda addressing the ongoing increase in cyberattacks. The first recent guidance provides best practices for insurance entities with regard to cyber insurance. The second guidance deals with the surge in benefits fraud that has been ongoing since the beginning of the COVID-19 pandemic, with directions on how regulated entities can best secure data.…
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D.C. District Court Rejects Privilege Claim for Post-Data Breach Forensic Report
Last month, in Guo Wengui v. Clark Hill, PLC, the United States District Court for the District of Columbia granted Plaintiff’s motion to compel production of Defendant’s third-party forensic investigation report following a cybersecurity incident. The court held that the forensic report was not covered by the attorney-client privilege or the work product doctrine, providing a cautionary tale for companies conducting post-breach investigations.
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2020 Cybersecurity and Privacy Developments: A Year in Review
Cybersecurity and data privacy, topics that were already top of mind for companies at the start of 2020, were pushed even further to the forefront due to the COVID-19 pandemic, significant data security enforcement actions, and the SolarWinds breach discovered in December.
The increased prevalence of remote work made it all the more critical for…
FTC Announces Settlement with Zoom Regarding Data Security Practices
On Monday, November 9, 2020, the U.S. Federal Trade Commission announced a proposed settlement with Zoom Video Communications, Inc. (“Zoom”), a video conferencing provider, regarding allegations that Zoom misrepresented its data security practices to users and designed its product to circumvent certain embedded security features of third-party software. The proposed settlement requires Zoom to undertake a range of specific remedial measures related to its data security practices. It also imposes multiple layers of reporting and certification requirements.
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OFAC and FinCEN Issue Advisories on Cyber Ransom Payments
In the wake of one of the largest reported medical ransomware attacks in U.S. history, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN) issued last week a pair of advisories to assist in efforts to combat the increasing threat of ransomware attacks and related sanctions and anti-money laundering (AML) compliance issues. Like our blog post last month on the same topic, the advisories highlight the importance of considering the legal risks relating to ransomware payments and confirm that OFAC may pursue enforcement actions against ransomware payments that violate U.S. sanctions.…
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