In late July 2019, U.S. federal and state regulators announced three headline‑grabbing data privacy and cybersecurity enforcement actions against Equifax and Facebook. Although coverage of these cases has focused largely on their striking financial penalties, as important are the terms the settlements imposed on the companies’ operations as well as their officers, directors, and compliance professionals—and what they signal about potential future enforcement activity to come.
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Whistleblowers: Who Are They and Why Should You Care?
While legal protections for whistleblowers in the United States were first adopted in the late 1970s for federal employees, statutory protections enacted in the last 20 years have substantially increased protection beyond the federal workforce to certain private-sector employees. These protections create a number of potential issues for companies today, ranging from employee retaliation lawsuits to regulatory investigations.
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New York Passes Expansive New Cybersecurity Law
On July 25, 2019, New York Governor Andrew Cuomo signed into law the Stop Hacks and Improve Electronic Data Security Act (the “SHIELD Act” or the “Act”), which expands data breach notification obligations under New York law and for the first time imposes affirmative cybersecurity obligations on covered entities.
The Act makes five principal changes
Dealing with an Investigation: Communication
The overall success of an investigation depends on the flow of communications between those overseeing an investigation, those conducting it and the company’s relevant stakeholders. As such, it is necessary to identify responsibilities and define the structure of communications at the outset of the investigation
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Disclosure and Notification Considerations When Managing a Crisis
Effectively dealing with a crisis often requires disclosure to government authorities, shareholders, and other stakeholders, even when many facts remain unknown. Companies must toe a delicate line when assessing when, to whom, and how much to disclose, especially in the absence of complete information.
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SEC to Allow Settling Parties to Submit Simultaneous Settlement Offers and Applications for Waiver from Disqualifications
On July 3, SEC Chairman Jay Clayton issued a statement signaling a policy change in SEC settlements and the consideration of applications for waiver of collateral consequences flowing from those settlements, such as the loss of certain significant procedural advantages in (or even outright exemption from) the securities registration process.[1] In practice, this change could both streamline the process of settling enforcement actions with the SEC and provide additional certainty to settling entities, which, under the current regime, must decide whether to settle a matter before completing and knowing the outcome of negotiations over waivers.
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Dealing with an Investigation: Data Collection and Management
Depending on the matter, data collection and management can be among the most daunting and logistically difficult tasks. Ensuring that the full relevant universe of data is being preserved and considered and that accurate recordkeeping is being performed is essential to managing large volumes of information and, in turn, facilitating fact-finding goals and risk assessment.
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H.R. 2534: Insider Trading Prohibition Act – Congress Considers Enacting Changes to Insider Trading Law Under Section 10(b)
Last month, Representative Jim Himes (D-Conn) and his co-sponsors, Representatives Carolyn B. Maloney (D-NY) and Denny Heck (D-WA), introduced H.R. 2534: The Insider Trading Prohibition Act. Unlike its substantially similar predecessor, H.R. 1625, which was introduced by Representative Himes on March 25, 2015, H.R. 2534 has gained some momentum in the U.S. House of Representatives, having been unanimously approved by the Financial Services Committee in May 2019. Although the bill is only at the preliminary stage, if the proposal eventually proceeds further in the process of becoming law, it will represent a potentially significant shift in and clarification of U.S. insider trading laws.
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Proposed Bad Actor Disqualification Act of 2019 Would Severely Limit the Availability of Waivers for Institutions Entering into Settlements with the SEC and DOJ
Last month, Representative Maxine Waters, Chair of the House Financial Services Committee, introduced a discussion draft of the “Bad Actor Disqualification Act of 2019” (the “Proposed Act”). Similar to proposed legislation Rep. Waters introduced in 2015 and 2017, the effect of the Proposed Act, if passed, would be to dramatically increase the burdens on institutions
Dealing with an Investigation: Planning Ahead
The beginning stages of an investigation are often the most critical. At the outset of any investigation, information is often limited and events are unfolding quickly. As a result, it is important to develop a clear and adaptable plan that is appropriately scoped, identifies the right team and sets forth the steps that will be taken as part of the investigation. Having a written plan in place is crucial to making sure that all relevant stakeholders are on the same page about what activities the investigation will include. It also ensures that the investigation is managed effectively and is guided by a clear set of objectives.
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