On April 26, 2024, the Federal Trade Commission (“FTC” or the “Commission”) announced changes to the Health Breach Notification Rule (“HBNR”), which requires certain entities not covered by the Health Insurance Portability and Accountability Act (“HIPAA”) to notify consumers, the FTC, and, in some cases, the media of breaches of unsecured personally identifiable health data.[1] The final rule seeks to address technological and industry advancements since the original HBNR was adopted in 2009 by clarifying the rule’s applicability to direct-to-consumer health technologies (such as fitness trackers) which have proliferated in recent years. The final rule also expands the information that covered entities must provide to consumers when notifying individuals of a data breach.Continue Reading FTC Announces Reforms to the Health Breach Notification Rule
Crossing a New Threshold for Material Cybersecurity Incident Reporting
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
In July 2023, the U.S. Securities and Exchange Commission (SEC) adopted final rules to enhance and standardize disclosure requirements related to cybersecurity. In order to comply with the new reporting requirements of the rules, companies will need to make ongoing materiality determinations with respect to cybersecurity incidents and series of related incidents. The inherent nature of cybersecurity incidents, which are often initially characterized by a high degree of uncertainty around scope and impact, and an SEC that is laser-focused on cybersecurity from both a disclosure and enforcement perspective, combine to present registrants and their boards of directors with a novel set of challenges heading into 2024.Continue Reading Crossing a New Threshold for Material Cybersecurity Incident Reporting
New York Department of Financial Services Finalizes Amendments to Cybersecurity Regulation
On November 1, the New York Department of Financial Services (“DFS” or the “Agency”) announced finalized amendments to its Cybersecurity Regulation applicable to DFS-regulated entities.[1] The finalized amendments to the Cybersecurity Regulation (the “Amendments”) contain significant revisions designed to mandate preventative measures to address common attack vectors and enhance cybersecurity governance, bringing more formality and uniformity to the assessment and mitigation of a covered entity’s specific cybersecurity risks.[2] The Amendments may also portend future changes to cybersecurity regulations outside of DFS, as the original DFS Cybersecurity Regulation influenced many existing cybersecurity requirements in other areas of the law. Continue Reading New York Department of Financial Services Finalizes Amendments to Cybersecurity Regulation
FTC Finalizes Security Incident Reporting Amendments to GLBA Safeguards Rule
Last week, the Federal Trade Commission (“FTC” or “Commission”) finalized its supplemental revisions to the 2021 amendments to its implementation of the Gramm Leach Bliley Act Safeguards Rule (the “Amended Safeguards Rule”).[1] The supplemental revisions to the Amended Safeguards Rule will require covered non-banking financial institutions—e.g., automobile dealerships, mortgage brokers, payday lenders, retailers that issue credit cards—[2] to report certain security breaches impacting unencrypted customer information to the Commission no later than thirty (30) days after discovery.[3] The supplemental revisions to the Amended Safeguards Rule will take effect six (6) months after publication in the Federal Register.Continue Reading FTC Finalizes Security Incident Reporting Amendments to GLBA Safeguards Rule
Broad Definition of Sensitive Data and Concern for Children’s and Teenagers’ Data in Delaware Privacy Law Reflect Recent Trends in Evolving Data Protection Landscape
On September 11, Delaware’s governor signed into law the Delaware Personal Data Privacy Act (the “DPDPA” or “Act”),[1] establishing Delaware as the 12th state in the U.S. to enact its own comprehensive data protection law and contributing to the patchwork of U.S. data protection regimes that continue to proliferate in the absence of federal regulation. Continue Reading Broad Definition of Sensitive Data and Concern for Children’s and Teenagers’ Data in Delaware Privacy Law Reflect Recent Trends in Evolving Data Protection Landscape
New SEC Disclosure Rules for Cybersecurity Incidents and Governance and Key Takeaways
On July 26, 2023, the U.S. Securities and Exchange Commission (the “SEC” or “Commission”) adopted rules to enhance and standardize disclosure requirements related to cybersecurity incident reporting and cybersecurity risk management, strategy, and governance.Continue Reading New SEC Disclosure Rules for Cybersecurity Incidents and Governance and Key Takeaways
SEC Proposes Rules Limiting the Use of Artificial Intelligence by Registered Investment Advisers and Broker-Dealers
On July 26, 2023, the Securities and Exchange Commission (“SEC”) proposed new rules targeting the use of predictive data analytics and artificial intelligence (“AI”) by registered investment advisers (“RIAs”) and broker-dealers.[1] The new proposed rules focus on the potential for conflicts of interest and the possibility that newer, more complex analytics models (including those using AI) might optimize decision making for RIAs and broker-dealers by placing those firms’ interests above the interests of their clients.[2] The proposed rules would require RIAs and broker-dealers to: (i) evaluate whether their use of technologies “that optimize for, predict, forecast or direct investment-related behaviors or outcomes” create such a conflict of interest, and (ii) either stop using or address the effects of tools that place a firm’s interests before the interests of clients. RIAs and broker-dealers will also will be required to adopt policies to ensure compliance with the new proposed rules.[3] Continue Reading SEC Proposes Rules Limiting the Use of Artificial Intelligence by Registered Investment Advisers and Broker-Dealers
Recent Developments In Data Privacy Enforcement In Brazil And A Comparison With The U.S. Regime
The Brazilian General Data Protection Law (the “LGPD”—Lei Geral de Proteção de Dados)[1] came into effect in September 2020. Given the LGPD’s relatively recent adoption, there has been uncertainty surrounding how public authorities and courts in Brazil will interpret and apply the law. On February 27, 2023, the Brazilian national data protection authority (the “ANPD” Autoridade Nacional de Proteção de Dados) addressed some of this uncertainty when it issued sanctioning guidelines for the LGPD (the “Sanctioning Guidelines”).[2] The Sanctioning Guidelines offer insight into the types of sanctions companies may face and the factors the ANDP will consider when imposing such sanctions.Continue Reading Recent Developments In Data Privacy Enforcement In Brazil And A Comparison With The U.S. Regime
SEC Charges Public Company For Alleged Misleading Disclosures Surrounding Ransomware Attack
On March 9, 2023, the Securities and Exchange Commission (“SEC”) brought an enforcement action against a public company, Blackbaud Inc. (“Blackbaud” or the “Company”), alleging that it had made misleading disclosures about a 2020 ransomware attack.[1] This is the fourth SEC settled enforcement action concerning disclosures following a cyberattack.[2] This development highlights increased regulatory scrutiny that public companies face related to cyberattacks and serves as a potential prelude to the SEC’s aggressiveness in enforcing its upcoming revised rules on cybersecurity incident disclosures. Continue Reading SEC Charges Public Company For Alleged Misleading Disclosures Surrounding Ransomware Attack
Cybersecurity: Continued Cyberattacks and New Regulations Result in Increased Risk
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2023”.
In a recent survey of almost 2,800 global organizations, one in five respondents reported experiencing a ransomware attack in 2021—with almost half of those respondents suffering significant operational impacts as a result.