Cybersecurity

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The following is part of our annual publication Selected Issues for Boards of Directors in 2025. Explore all topics or download the PDF.

The SEC pursued multiple high profile enforcement actions in 2024, alongside issuing additional guidance around compliance with the new cybersecurity disclosure rules. Together these developments demonstrate a continued focus by the SEC on robust disclosure frameworks for cybersecurity incidents. Public companies will need to bear these developments in mind as they continue to grapple with cybersecurity disclosure requirements going into 2025.Continue Reading Cybersecurity Disclosure and Enforcement Developments and Predictions

On October 22, 2024, the SEC announced settled enforcement actions charging four companies with making materially misleading disclosures regarding cybersecurity risks and intrusions. These cases mark the first to bring charges against companies who were downstream victims of the well-known cyber-attack on software company SolarWinds. The four companies were providers of IT services and digital communications products and settled the charges for amounts ranging from $990,000 to $4 million.Continue Reading SEC Charges Four Companies Impacted by Data Breach with Misleading Cyber Disclosures

Last week, the New York Department of Financial Services (“DFS”) issued guidance addressed to executives and information security personnel of entities regulated by DFS to assist them in understanding and assessing cybersecurity risks associated with the use of artificial intelligence (“AI”), and implementing appropriate controls to mitigate such risks (the “Guidance”).[1] In particular, and to address inquiries received by DFS regarding AI’s impact on cyber risk, the Guidance is intended is to explain how the framework set forth in DFS’ Cybersecurity Regulation (23 NYCRR Part 500) should be used to assess and address such risks.Continue Reading New York Department of Financial Services Issues Guidance on Cybersecurity Risks Arising from Artificial Intelligence

On July 17, 2024, Law No. 90/2024 containing provisions for strengthening national cybersecurity and addressing cybercrime (the “Cybersecurity Law”) entered into force.Continue Reading Cybersecurity Law Enters Into Force

The Biden administration recently issued Executive Order 14117 (the “Order”) on “Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern.”  Building upon earlier Executive Orders[1], the Order was motivated by growing fears that “countries of concern” may use artificial intelligence and other advanced technologies to analyze and manipulate bulk sensitive personal data for nefarious purposes.  In particular, the Order notes that unfettered access to American’s bulk sensitive personal data and United States governmental data by countries of concern, whether via data brokers, third-party vendor agreements or otherwise, may pose heightened national security risks. To address these possibilities, the Order directs the Attorney General to issue regulations prohibiting or restricting U.S. persons from entering into certain transactions that pose an unacceptable risk to the national security of the United States.  Last week, the Department of Justice (“DOJ”) issued an Advance Notice of Proposed Rulemaking, outlining its preliminary approach to the rulemaking and seeking comments on dozens of issues ranging from the definition of bulk U.S. sensitive personal data to mitigation of compliance costs. Continue Reading Biden Administration Executive Order Targets Bulk Data Transactions

On January 29, 2024, the U.S. Department of Commerce (“Commerce”) published a notice of proposed rulemaking (the “Notice”) seeking comments on proposed rules promulgated by Commerce’s Bureau of Industry and Security (“BIS”) and newly-created Office of Information and Communications Technology and Services to implement Executive Order 14110, the Biden Administration’s October 2023 executive order on artificial intelligence (“AI”)  (“E.O. 14110”, see our prior alert here)[1].  The Notice also implements Executive Order 13984, a 2021 executive order relating to malicious cyber-enabled activities (“E.O. 13984”) (with respect to which Commerce had already issued an advanced notice of proposed rulemaking)[2]. Continue Reading Proposed Rulemaking by U.S. Department of Commerce Introduces New Obligations on U.S. IaaS Providers and Foreign Resellers to Curb Malicious Cyber-Enabled Activities

Quantum technology is seen as having the potential to revolutionize many aspects of technology, the economy and society, including the financial sector. At the same time, this technology represents a significant threat to cybersecurity, especially due to its potential to render most current encryption schemes obsolete.Continue Reading Quantum Computing and the Financial Sector: World Economic Forum Lays Out Roadmap Towards Quantum Security

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

On 15 January 2024, the UK Information Commissioner’s Office (“ICO”)[1] launched a series of public consultations on the applicability of data protection laws to the development and use of generative artificial intelligence (“GenAI”). The ICO is seeking comments from “all stakeholders with an interest in GenAI”, including developers, users, legal advisors and consultants.[2]

This first public consultation (which closes on 1 March 2024) focuses on the lawful basis for training GenAI models on web-scraped data.[3]Continue Reading The UK ICO launches consultation series on GenAI

Saudi Arabia has in the past few years taken strides to update its legislative frameworks to reflect technological advancements, and data protection laws are the latest iterations of such reform. Data protection issues were historically not codified as a standalone law in the country and instead dealt with under what is broadly known as the “sharia” judicial system, which includes the principle of individuals’ right to privacy and safety from encroachment into one’s personal affairs.[1] The spirit of this principle, along with modern interpretations of privacy as applied to personal data, carried over into the Kingdom’s Personal Data Protection Law (the “PDPL”), implemented by Royal Decree M/19 of 17 September 2021 and amended on 21 March 2023.[2] The amended PDPL was published in the official gazette on and formally effective as of September 14, 2023, and entities have an extended grace period of one year (i.e., until September of 2024) to comply.[3] In conjunction with the PDPL, two sets of related regulations were published on the same date – the PDPL Implementing Regulations (the “Implementing Regulations”) and the regulations on personal data transfer (the “Transfer Regulations” and together with the Implementing Regulations, the “Regulations”).[4]Continue Reading Saudi Arabia’s Data Protection Law and Regulations Come Into Effect