Privacy & Information Security Law Blog

On June 23, 2017, Anthem Inc., the nation’s second largest health insurer, reached a record $115 million settlement in a class action lawsuit arising out of a 2015 data breach that exposed the personal information of more than 78 million people. Among other things, the settlement creates a pool of funds to provide credit monitoring and reimbursement for out-of-pocket costs for customers, as well as up to $38 million in attorneys’ fees.

The U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) and the Health Care Industry Cybersecurity Task Force (the “Task Force”) have published important materials addressing cybersecurity in the health care industry.

On May 27, 2017, the National Information Security Standardization Technical Committee of China published draft guidelines on cross-border transfers pursuant to the new Cybersecurity Law, entitled Information Security Technology – Guidelines for Data Cross-Border Transfer Security Assessment (the “Draft Guidelines"). The earlier draft, Measures for the Security Assessment of Outbound Transmission of Personal Information and Critical Data (the “Draft Measures”), requires network operators to conduct “security assessments” when they propose to transfer personal information and “important information” to places outside of China. These “security assessments” are essentially audits of the cybersecurity circumstances surrounding the proposed transfer that are intended to produce an assessment of the risk involved. If the assessment indicates that the risk is too high, the transfer must be terminated.

On June 7, 2017, the European Commission published a paper signalling the EU’s intention to increase its role in directing cybersecurity policy and responses across its member states. The increasing threat posed by cyber attacks is highlighted in the EU Commission’s Reflection Paper on the Future of European Defence, which builds its case for closer union in respect of defense efforts.

On May 26, 2017, Alcoa Community Federal Credit Union (“Alcoa”), on behalf of itself, credit unions, banks and other financial institutions, filed a nationwide class action against Chipotle Mexican Grill, Inc. (“Chipotle”). The case arises from a breach of customer payment card data. The putative class consists of all such financial institutions that issued payment cards, or were involved with card-issuing services, for customers who made purchases at Chipotle from March 1, 2017, to the present. Plaintiffs allege a number of “inadequate data security measures,” including Chipotle’s decision not to implement EMV technology. 

Recently, the Colorado Division of Securities (the “Division”) published cybersecurity regulations for broker-dealers and investment advisers regulated by the Division. Colorado’s cybersecurity regulations follow similar regulations enacted in New York that apply to certain state-regulated financial institutions.

On June 1, 2017, the new Cybersecurity Law went into effect in China. This post takes stock of (1) which measures have been passed so far, (2) which ones go into effect on June 1 and (3) which ones are in progress but have yet to be promulgated.

On May 23, 2017, various attorneys general of 47 states and the District of Columbia announced that they had reached an $18.5 million settlement with Target regarding the states’ investigation of the company’s 2013 data breach. This represents the largest multi-state data breach settlement achieved to date.

On May 22, 2017, New York Attorney General Eric T. Schneiderman announced that the AG’s office has reached a settlement (the “Settlement”) with Safetech Products LLC (“Safetech”) regarding the company’s sale of insecure Bluetooth-enabled wireless doors and padlocks. In a press release, Schneiderman indicated that this “marks the first time an attorneys general’s office has taken legal action against a wireless security company for failing to protect their [customers’] personal and private information.”

On May 19, 2017, the Cyberspace Administration of China (“CAC”) issued a revised draft (the “Revised Draft”) of its Measures for the Security Assessment of Outbound Transmission of Personal Information and Critical Data. The original draft was issued in April 2017, and similar to the original draft, the Revised Draft does not have the impact of law; it does, however, provide an indication of how the CAC’s views on the Cybersecurity Law have evolved since the publication of the original draft. The Revised Draft was issued after the CAC received comments on the original draft from numerous parties.

On May 5, 2017, the U.S. District Court for the Southern District of New York entered a default judgment in favor of the SEC against three Chinese defendants accused of hacking into the nonpublic networks of two New York-headquartered law firms and stealing confidential information regarding several publicly traded companies engaged in mergers and acquisitions. The defendants allegedly profited illegally by trading the stolen nonpublic information. After the defendants failed to answer the SEC’s complaint, the court entered a default judgment against them, imposing a fine ...

On May 12, 2017, a massive ransomware attack began affecting tens of thousands of computer systems in over 100 countries. The ransomware, known as “WannaCry,” leverages a Windows vulnerability and encrypts files on infected systems and demands payment for their release. If payment is not received within a specified time frame, the ransomware automatically deletes the files. A wide range of industries have been impacted by the attack, including businesses, hospitals, utilities and government entities around the world.

On May 11, 2017, President Trump signed an executive order (the “Order”) that seeks to improve the federal government’s cybersecurity posture and better protect the nation’s critical infrastructure from cyber attacks. The Order also seeks to establish policies for preventing foreign nations from using cyber attacks to target American citizens.

Read the full text of the Order.

On May 2, 2017, the Cyberspace Administration of China published the final version of the Measures for the Security Review of Network Products and Services (for trial implementation) (the “Measures”), after having published a draft for public comment in February. Pursuant to the Cybersecurity Law of China (the “Cybersecurity Law”), if an operator of key information infrastructure purchases a network product or service that may affect national security, a security review of that product or service is required. The Measures provide detailed information about how these security reviews will actually be implemented. The Measures will come into effect on June 1, 2017, together with the Cybersecurity Law. The Measures should not be confused with the final version of the draft Measures for the Security Assessment of Outbound Transmission of Personal Information and Critical Data, which was published on April 11, 2017, and remain open for public comment.

Earlier this month, the New York State Department of Financial Services (“NYDFS”) recently published FAQs and key dates for its cybersecurity regulation (the “NYDFS Regulation”) for financial institutions that became effective on March 1, 2017.

The Cybersecurity Law of China, which was passed in November of 2016, introduced a data localization requirement requiring “operators of key information infrastructure” to retain, within China, critical data and personal information which they collect or generate in the course of operating their business in China. If an entity has a genuine need resulting from a business necessity to transmit critical data or personal information to a destination outside of China, it can do so provided it undergoes a “security assessment.”

Haim Ravia and Dotan Hammer of Pearl Cohen Zedek Latzer Baratz recently published an article outlining Israel’s new Protection of Privacy Regulations (“Regulations”), passed by the Knesset on March 21, 2017. The Regulations will impose mandatory comprehensive data security and breach notification requirements on anyone who owns, manages or maintains a database containing personal data in Israel.

The Regulations will become effective in late March 2018.

Read Pearl Cohen’s full article.

Recently, Virginia passed an amendment to its data breach notification law that adds state income tax information to the types of data that require notification to the Virginia Office of the Attorney General in the event of unauthorized access and acquisition of such data. Under the amended law, an employer or payroll service provider must notify the Virginia Office of the Attorney General after the discovery or notification of unauthorized access and acquisition of unencrypted and unredacted computerized data containing a Virginia resident’s taxpayer identification number in combination with the income tax withheld for that taxpayer. 

On April 5, 2017, Hunton & Williams LLP and Stroz Friedberg will host a webinar on managing privacy and data security risks before, during and after an M&A transaction. Join Lisa J. Sotto, partner and chair of Global Privacy and Cybersecurity at Hunton & Williams; Rocco Grillo, Cyber Resilience Global Leader from Stroz Friedberg; and Keith O’Sullivan, CISO from Time Inc., for a discussion on how to prepare for and understand privacy and data security challenges in the context of corporate transactions.

On March 21, 2017, New York Attorney General Eric Schneiderman announced that the New York Office of the Attorney General received over 1,300 data breach notifications in 2016, a 60 percent increase from 2015. The reported breaches led to the exposure of personal information of 1.6 million New York residents. According to the Attorney General’s report, 46 percent of the exposed personal information consisted of Social Security numbers, and 35 percent consisted of financial account information. Attorney General Schneiderman cited the updated New York State Department of ...

On March 17, 2017, retailer Neiman Marcus agreed to pay $1.6 million as part of a proposed settlement (the “Settlement”) to a consumer class action lawsuit stemming from a 2013 data breach that allegedly compromised the credit card data of approximately 350,000 customers.

On March 9, 2017, AllClear ID hosted a webinar with Hunton & Williams partner and chair of the Global Privacy and Cybersecurity practice Lisa J. Sotto on the new cybersecurity regulations from the New York State Department of Financial Services (“NYDFS”). The NYDFS regulations impose significant cybersecurity requirements on impacted businesses that will dictate how they plan for, respond to and recover from data security events.

On March 21, 2017, Hunton & Williams is pleased to host an in-person seminar in its London office featuring seasoned cybersecurity practitioners. Drawing from deep experience in their respective fields, the panel members will discuss the implications of the EU General Data Protection Regulation’s breach notification obligations in the context of a state-of-the-art cyber attack simulation. In doing so, the panelists will share best practices to help protect organizations in the event of a cyber attack.

On March 9, 2017,  Home Depot Inc. (“Home Depot”) reached an agreement that includes the payment of $25 million and the implementation of new data security measures to resolve a putative class action brought by financial institutions impacted by the company’s 2014 data breach.

Hunton & Williams announces the formation of a cross-disciplinary legal team dedicated to guiding companies through the minefield of regulatory and cyber-related risks associated with high-stakes corporate mergers and acquisitions. 

On March 9, 2017, AllClear ID will host a webinar with Hunton & Williams partner and chair of the Global Privacy and Cybersecurity practice Lisa J. Sotto on the new cybersecurity regulations from the New York State Department of Financial Services (“NYDFS”).

China’s new Cybersecurity Law will impose new restrictions on information flows from operators of key information infrastructure, and will become effective in June 2017. Hunton & Williams LLP will host a webinar on China’s New Cybersecurity Law on March 7, 2017, at 12:00 p.m. EST.

On February 13, 2017, the Parliament of Australia passed legislation that amends the Privacy Act of 1988 (the “Privacy Act”) and requires companies with revenue over $3 million AUD ($2.3 million USD) to notify affected Australian residents and the Australian Information Commissioner (the “Commissioner”) in the event of an “eligible data breach.”

On February 4, 2017, the Cyberspace Administration of China published a draft of its proposed Measures for the Security Review of Network Products and Services (the “Draft”). Under the Cybersecurity Law of China, if an operator of key information infrastructure purchases network products and services that may affect national security, a security review is required. The Draft provides further hints of how these security reviews may actually be carried out, and is open for comment until March 4, 2017.

On February 1, 2017, the U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) announced a $3.2 million civil monetary penalty against Children’s Medical Center of Dallas (“Children’s”) for alleged ongoing violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Privacy and Security Rules, following two consecutive breaches of patient electronic protected health information (“ePHI”). This is the third enforcement action taken by OCR in 2017, following the respective actions taken against MAPFRE Life Insurance of Puerto Rico and Presence Health earlier in January.

On January 19, 2017, the North American Electric Reliability Corporation (“NERC”) released a draft Reliability Standard CIP-013-1 – Cyber Security – Supply Chain Risk Management (the “Proposed Standard”). The Proposed Standard addresses directives of the Federal Energy Regulatory Commission (“FERC”) in Order No. 829 to develop a new or modified reliability standard to address “supply chain risk management for industrial control system hardware, software, and computing and networking services associated with bulk electric system operations.” 

On January 18, 2017, the Department of Homeland Security (“DHS”) issued an updated National Cyber Incident Response Plan (the “Plan”) as directed by Obama’s Presidential Policy Directive 41, issued this past summer, and the National Cybersecurity Protection Act of 2014.

On January 10, 2017, the National Institute of Standards and Technology (“NIST”) released proposed updates to the Framework for Improving Critical Infrastructure Cybersecurity (the “Cybersecurity Framework”). The proposed updates, which are found in Version 1.1 of the Cybersecurity Framework, are derived from feedback received by NIST regarding the first version, including from responses to a December 2015 request for information and discussions at a workshop held in April 2016.

Last month, the Standing Committee of the National People’s Congress of China published a full draft of the E-commerce Law (the “Draft”) and is giving the general public an opportunity to comment on the draft through January 26, 2017.

On January 3, 2017, the Office of Management and Budget (“OMB”) issued a memorandum (the “Breach Memorandum”) advising federal agencies on how to prepare for and respond to a breach of personally identifiable information (“PII”). The Breach Memorandum, which is intended for each agency’s Senior Agency Official for Privacy (“SAOP”), updates OMB’s breach notification policies and guidelines in accordance with the Federal Information Security Modernization Act of 2014 (“FISMA”).

On December 28, 2016, the New York State Department of Financial Services (“DFS”) announced an updated version of its cybersecurity regulation for financial institutions (the “Updated Regulation”). The Updated Regulation will become effective on March 1, 2017.

On December 14, 2016, the FTC announced that the operating companies of the AshleyMadison.com website (collectively, the “Operators”) have settled with the FTC and a coalition of state regulators over charges that the Operators deceived consumers and failed to protect users’ personal information. The FTC worked with a coalition of 13 states, the Office of the Privacy Commissioner of Canada and the Office of the Australian Information Commissioner to resolve this matter, which was initiated in the wake of the website’s July 2015 data breach.

The Privacy team at Hunton & Williams has authored several chapters of the recently published 2017 guide to data protection and privacy for Getting the Deal Through. The publication covers data privacy and data protection laws in 26 jurisdictions across the globe. Wim Nauwelaerts, Privacy team partner in the firm’s Brussels office, served as the contributing editor of the guide and co-authored the Belgium chapter and the EU overview.

Hunton & Williams LLP is proud to announce our Privacy & Information Security Law Blog has been named the top Cybersecurity and Information Privacy blog by The Expert Institute and #2 overall Best AmLaw Blog of 2016. All of our lawyers and contributors thank you for your support in making the blog a success.

On December 6, 2016, Hunton & Williams announced the release of the second edition treatise Privacy and Cybersecurity Law Deskbook (Wolters Kluwer Legal & Regulatory U.S.) by lead author Lisa J. Sotto, head of the firm’s Global Privacy and Cybersecurity practice. The Deskbook has become an essential tool for those involved in managing privacy and cybersecurity law issues. “The treatise provides a roadmap to comply with global data protection laws, navigate and comply with state breach notification requirements, and stay informed on emerging legal trends,” said Sotto. Members of the global practice group also contributed to the Deskbook. 

On December 1, 2016, the nonpartisan Commission on Enhancing Cybersecurity (the “Commission”), established in February 2016 by President Obama as part of a $19 billion Cybersecurity National Action Plan, issued its Report on Securing and Growing the Digital Economy (the “Report”), which includes recommended actions that the government and private sector can take over the next 10 years to improve cybersecurity.

On November 14, 2016, Lincoln Financial Securities Corp. (“LFS”), a subsidiary of Lincoln Financial Group, entered into a settlement (the “Settlement”) with the Financial Industry Regulatory Authority (“FINRA”), requiring LFS to pay a $650,000 fine and implement stronger cybersecurity protocols following a 2012 hack into its cloud-based server.

On November 14, 2016, the National Institute of Standards and Technology (“NIST”) published guidance on cybersecurity for internet-connected devices, Systems Security Engineering: Considerations for A Multidisciplinary Approach in the Engineering of Trustworthy Secure Systems (the “Guidance”). Citing “the continuing frequency, intensity, and adverse consequences of cyber-attacks,” the Guidance “addresses the engineering-driven perspective and actions necessary to develop more defensible and survivable systems.”

On November 7, 2016, Adobe Systems Inc. (“Adobe”) entered into an assurance of voluntary compliance (“AVC”) with 15 state attorneys general to settle allegations that the company lacked proper measures to protect its systems from a 2013 cyber attack that resulted in the theft of the personal information of millions of customers. Under the terms of the AVC, Adobe must pay $1 million to the attorneys general and implement new data security policies and practices.

As reported on the Insurance Recovery blog, earlier this week, retailer Tesco Plc’s (“Tesco”) banking branch reported that £2.5 million (approximately $3 million) had been stolen from 9,000 customer bank accounts over the weekend in what cyber experts said was the first mass hacking of accounts at a western bank. The reported loss still is being investigated by UK authorities, but is believed to have occurred through the bank’s online banking system. The loss, which is about half of what Tesco initially estimated, is still substantial and serves as a strong reminder that ...

On October 25, 2016, the United States Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued an advisory entitled Advisory to Financial Institutions on Cyber-Events and Cyber-Enabled Crime (the “Advisory”), to help financial institutions understand how to fulfill their Bank Secrecy Act obligations with regard to cyber events and cyber-enabled crime. The Advisory indicates that SAR reporting is mandatory for cyber events where the financial institution “knows, suspects or has reason to suspect a cyber-event was intended, in whole or in part, to conduct, facilitate, or affect a transaction or a series of transactions….” Implementing this new guidance will require increased collaboration between AML and cybersecurity or IT departments in large institutions, and may create challenges for smaller banks that are more likely to outsource their cybersecurity functions.

On November 7, 2016, the Standing Committee of the National People’s Congress of China enacted the final Cybersecurity Law after it held its third reading of the draft Cybersecurity Law on October 31, 2016. The first draft of the Cybersecurity Law was published for comment more than a year ago, followed by the second draft in July this year. The final Cybersecurity Law will apply from June 1, 2017.

On October 31, 2016, the Standing Committee of the National People’s Congress of China held a third reading of the draft Cybersecurity Law (the “third draft”). As we previously reported, the second draft of the Cybersecurity Law was published for comment in June. The National People’s Congress has not yet published the full text of the third draft of the Cybersecurity Law.

This post has been updated. 

On October 27, 2016, the Federal Communications Commission (“FCC”) announced the adoption of rules that require broadband Internet Service Providers (“ISPs”) to take steps to protect consumer privacy (the “Rules”). According to the FCC’s press release, the Rules are intended to “ensure broadband customers have meaningful choice, greater transparency and strong security protections for their personal information collected by ISPs.” 

The National Highway Safety Administration (“NHTSA”) recently issued non-binding guidance that outlines best practices for automobile manufacturers to address automobile cybersecurity. The guidance, entitled Cybersecurity Best Practices for Modern Vehicles (the “Cybersecurity Guidance”), was recently previewed in correspondence with the House of Representatives' Committee on Energy and Commerce (“Energy and Commerce Committee”).

On October 25, 2016, the Federal Trade Commission released a guide for businesses on how to handle and respond to data breaches (the “Guide”). The 16-page Guide details steps businesses should take once they become aware of a potential breach. The Guide also underscores the need for cyber-specific insurance to help offset potentially significant response costs.

On October 18, 2016, the United States Court of Appeals for the Fifth Circuit held in Apache Corp. v. Great American Ins. Co., No 15-20499 (5th Cir. Oct. 18, 2016), that a crime protection insurance policy does not cover loss resulting from a fraudulent email directing funds to be sent electronically to the imposter’s bank account because the scheme did not constitute “computer fraud” under the policy.

Earlier this month, Hunton & Williams announced that Global Privacy and Cybersecurity partner Aaron P. Simpson has switched to London from the firm’s New York office. He will continue his work on behalf of clients as a leader of the firm’s Global Privacy and Cybersecurity practice.

On October 14, 2016, the National Highway Transportation Administration (“NHTSA”) indicated in a letter to Congress that it intends to issue new best practices on vehicle cybersecurity. This letter came in response to an earlier request from the House Committee on Energy and Commerce (“Energy and Commerce Committee”) that NHTSA convene an industry-wide effort to develop a plan to address vulnerabilities posed to vehicles by On-Board Diagnostics (“OBD-II”) ports. Since 1994, the Environmental Protection Agency has required OBD-II ports be installed in all vehicles so that they can be tested for compliance with the Clean Air Act. OBD-II ports provide valuable vehicle diagnostic information and allow for aftermarket devices providing services such as “good driver” insurance benefits and vehicle tracking. Because OBD-II ports provide direct access to a vehicle’s internal network; however, OBD-II ports are widely cited as the central vulnerability to vehicle cybersecurity.

On October 19, 2016, the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve System (the “Fed”) and Office of the Comptroller of the Currency issued an advance notice of proposed rulemaking suggesting new cybersecurity regulations for banks with assets totaling more than $50 billion (the “Proposed Standards”).

On October 11, 2016, Group of Seven (“G-7”) financial leaders endorsed the Fundamental Elements of Cybersecurity for the Financial Sector (“Best Practices”), a set of non-binding best practices for banks and financial institutions to address cybersecurity threats. The endorsement was motivated by recent large hacks on international banks, including the February 2016 theft of $81 million from the central bank of Bangladesh’s account at the New York Federal Reserve.

A recent study from the National Institute of Standards and Technology (“NIST”) warns that an overabundance of computer security measures might actually lead users to engage in “risky computing behavior at work and in their personal lives.”

On October 27, 2016, the Federal Communications Commission (“FCC”) will vote on whether to finalize proposed rules (the "Proposed Rules”) concerning new privacy restrictions for Internet Service Providers (“ISPs”). The Proposed Rules, which revise previous versions introduced earlier this year, would require customers’ explicit (or “opt-in”) consent before an ISP can use or share a customer’s personal data, including web browsing and app usage history, geolocation data, children’s information, health information, financial information, email and other message contents and Social Security numbers.

On October 4, 2016, the U.S. Department of Defense (“DoD”) finalized its rule implementing the mandatory cyber incident reporting requirements for defense contractors under 10 U.S.C. §§ 391 and 393 (the “Rule”). The Rule applies to DoD contractors and subcontractors that are targets of any cyber incident with a potential adverse impact on information systems and “covered defense information” on those systems.

Episode 3: Lessons Learned

In the third segment of our 3-part series with Lawline, Lisa J. Sotto, head of our Global Privacy and Cybersecurity practice at Hunton & Williams LLP, discusses the details of the post-mortem following a data breach and the role of boards of directors before, during and after a breach. “We always want to revisit our incident response plan…and make changes to incorporate the lessons learned from a cyber event,” Sotto says. “We seek to ensure senior leadership understands how to prevent these events from happening in the future.”

Episode 2: Response

In the second segment of our 3-part series with Lawline, Lisa J. Sotto, head of our Global Privacy and Cybersecurity practice at Hunton & Williams LLP, discusses data breach notification obligations and actions to take to manage the regulatory onslaught in the aftermath of a breach. Sotto notes that “these investigations are challenging because the threat actors are enormously sophisticated, and in some circumstances we can never figure out what happened.”

On September 20, 2016, the Department of Transportation, through the National Highway Traffic Safety Administration (“NHTSA”), released federal cyber guidance for autonomous cars entitled Federal Automated Vehicles Policy (“guidance”).

Episode 1: Identify & Mobilize

In the first segment of our 3-part series with Lawline, Lisa J. Sotto, head of our Global Privacy and Cybersecurity practice at Hunton & Williams LLP, explains how to identify a cyber incident, mobilize your incident response team, coordinate with law enforcement and conduct an investigation.

On September 13, 2016, New York Governor Andrew Cuomo announced a proposed regulation that would require banks, insurance companies and other financial services institutions to establish and maintain a cybersecurity program designed to ensure the safety of New York’s financial services industry and to protect New York State from the threat of cyber attacks. 

In Part 3 of Lisa J. Sotto’s discussion at Bloomberg Law’s Second Annual Big Law Business Summit, she speaks on supply and demand in the privacy and cybersecurity fields. Lisa, partner and head of Hunton & Williams LLP’s Global Privacy and Cybersecurity practice group, points out that “demand very much outweighs supply.” To be a successful lawyer in this field, Lisa emphasizes the need for experience, recognizing that, “there is so much nuance, [and data privacy is] culturally based so you cannot just open a book and understand what to do.” In the next 10 years, Lisa hopes ...

As we previously reported, Lisa J. Sotto, partner and head of Hunton & Williams LLP’s Global Privacy and Cybersecurity practice group, spoke at Bloomberg Law’s Second Annual Big Law Business Summit on changes in the privacy and security legal landscape. In Part 2 of her discussion, Lisa speaks about the evolution of privacy laws over the years. The “hundreds of [privacy laws] at the federal and state level,” as well as data protection laws in countries all over the world, is a far cry from the landscape in 1999 when Lisa started the privacy practice at Hunton & Williams. To keep up ...

Last month, the People’s Republic of China’s Ministry of Transportation, Ministry of Industry and Information Technology and six other administrative departments jointly published the Interim Measures for the Administration of Operation and Services of E-hailing Taxis (the “Measures”). E-hailing is an increasingly popular business in China and has already become a compelling alternative to the traditional taxi. The Measures seek to regulate this emerging industry, and will come into effect on November 1, 2016. Below is a summary of the key requirements.

The Office of Management and Budget (“OMB”) recently issued updates to Circular A-130 covering the management of federal information resources. OMB revised Circular A-130 “to reflect changes in law and advances in technology, as well as to ensure consistency with Executive Orders, Presidential Directives, and other OMB policy.” The revised policies are intended to transform how privacy is addressed across the branches of the federal government.

Lisa J. Sotto, partner and head of Hunton & Williams LLP’s Global Privacy and Cybersecurity practice group, recently spoke at Bloomberg Law’s Second Annual Big Law Business Summit. In Part 1 of the panel discussion, Lisa describes the dramatic changes in the legal landscape of privacy over the last 10 to 15 years, discussing the emergence of privacy laws such as “the Gramm-Leach-Bliley Act for the financial sector, HIPAA for the health care sector and…of course, the local implementation of the European Data Protection Directive.” She then continues to note an ...

On July 26, 2016, the White House unveiled Presidential Policy Directive PPD-41 (“PPD-41”), Subject: United States Cyber Incident Coordination, which sets forth principles for federal responses to cyber incidents approved by the National Security Council (“NCS”). Coming on the heels of several high-profile federal breaches, including the Office of Personnel Management’s loss of security clearance information and the hack of over 700,000 IRS accounts, PPD-41 is a component of President Obama’s Cybersecurity National Action Plan. PPD-41 first focuses on incident response to cyber attacks on government assets, but also outlines federal incident responses to cyber attacks on certain critical infrastructure within the private sector.

On July 25, 2016, Lisa Sotto, partner and head of the Global Privacy and Cybersecurity practice at Hunton & Williams LLP, was interviewed on KUCI 88.9 FM radio’s Privacy Piracy show. Lisa discussed the changing regulatory landscape, information security enforcement actions, the threat actors who attack companies’ data and how to manage the aftermath of a data breach. “There is no industry sector that is exempt [from being targeted],” Lisa says. She notes that, because “data can be sold for a monetary sum, data is now the equivalent of cash.”

Listen to the full interview.

On July 6, 2016, the European Parliament adopted the Directive on Security of Network and Information Systems (the “NIS Directive”), which will come into force in August 2016. EU Member States will have 21 months to transpose the NIS Directive into their national laws. The NIS Directive is part of the European Commission’s cybersecurity strategy for the European Union, and is designed to increase cooperation between EU Member States on cybersecurity issues.

On July 5, 2016, the Standing Committee of the National People’s Congress of the People’s Republic of China (the “Standing Committee”) published the full second draft of the Cybersecurity Law (the “second draft”). The publication of the second draft comes after the Standing Committee’s second reading of the draft on June 27, 2016. The public may comment on the second draft of the Cybersecurity Law until August 4, 2016.

On July 5, 2016, the European Commission announced the launch of a new public-private partnership (the “Partnership”) on cybersecurity, as part of its Digital Single Market and EU Cybersecurity strategies. In this context, the European Commission released several documents, including a Commission Decision establishing a contractual arrangement of the new Partnership for cybersecurity industrial research, and a Staff Working Document on the preparation activities for the Partnership.

On June 27, 2016, the Standing Committee of the National People’s Congress of the People's Republic of China held a second reading of the draft Cybersecurity Law (the “second draft”). The law is aimed at strengthening the protection and security of key information infrastructure and important data in China. As we previously reported, the first draft of the Cybersecurity Law was published for comment almost a year ago, but the National People’s Congress has not published the full second draft of the Cybersecurity Law to date.

On June 15, 2016, the U.S. Department of Homeland Security (“DHS”) and U.S. Department of Justice (“DOJ”) jointly issued final guidance on the Cybersecurity Information Sharing Act of 2015 (“CISA”). Enacted in December 2015, CISA includes a variety of measures designed to strengthen private and public sector cybersecurity. In particular, CISA provides protections from civil liability, regulatory action and disclosure under the Freedom of Information Act (“FOIA”) and other open government laws for “cyber threat indicators” (“CTI”) and “defensive measures” (“DM”) that are shared: (1) among businesses or (2) between businesses and the government through a DHS web portal. Congress passed CISA in order to increase the sharing of cybersecurity information among businesses and between businesses and the government, and to improve the quality and quantity of timely, actionable cybersecurity intelligence in the hands of the private sector and government information security professionals.

In a recent video segment, “What Do You Do with a Hacked Law Firm?”, from Mimesis Law’s Cy-Pher Executive Roundtable held in May, Lisa Sotto, chair of the firm’s Global Privacy and Cybersecurity practice, and other privacy professionals discussed the Federal Trade Commission’s jurisdiction in bringing enforcement actions against law firms in a breach event. “There’s no reason why law firms are exempt from [those actions],” says Sotto. However, if the information lost is financial information or trade secrets rather than personal information, “it’s not ...

In a recent video published by Mimesis Law, Lisa Sotto, chair of the firm’s Global Privacy and Cybersecurity practice, was interviewed during Mimesis Law’s Cy-Pher Executive Roundtable in New York. Sotto, along with several other privacy professionals, discussed the risks that law firms face in protecting their clients’ confidential information, as well as their own data. “[Law firms] are seeing multiple restrictions from clients imposing safeguards on [firms] with respect to their data,” explains Sotto. “Companies that work with law firms need to understand ...

On May 19, 2016, Hunton & Williams LLP and The Advisory Board Company hosted a webinar on How to Discuss Cybersecurity with Your C-Suite and Board of Directors. Hunton partner Matthew Jenkins moderated the session, and speakers included partner Paul Tiao, member of the firm’s Global Technology and Privacy practice, and The Advisory Board Company’s Chief Information Security Officer and Senior Research Director. Together, they provided insight and advice on how to have a productive conversation about security and risk with the most senior leaders in a health care ...

On May 17, 2016, the European Council adopted its position at first reading of the Network and Information Security Directive (the “NIS Directive”). The NIS Directive was proposed by the European Commission on February 7, 2013, as part of its cybersecurity strategy for the European Union, and is designed to increase cooperation between EU Member States on cybersecurity issues.

The NIS Directive will impose security obligations on “operators of essential services” in critical sectors and “digital service providers.” These operators will be required to take measures to manage cyber risks and report major security incidents.

Recently, cybersecurity has become an agenda item for many health care boards and C-level executives. Security is a complex topic and often these senior leaders are poorly informed about the risks their organizations face and the measures needed to address them. Hunton & Williams LLP and The Advisory Board Company will host a webinar on How to Discuss Cybersecurity with Your C-Suite and Board of Directors on May 19, 2016, at 3:00 p.m. Join this webinar to gain insight and advice on how to have a productive conversation about security and risk with the most senior leaders in a health care ...

Recently, the Council of Institutional Investors (“CII”) issued a guide to shareholder engagement on cyber risk. The guide is intended to enable shareholders to ask appropriate questions of boards to gauge whether companies are taking proper steps to mitigate cyber risk. The guide poses the following five questions:

• How are the company’s cyber risks communicated to the board, by whom and with what frequency?
• Has the board evaluated and approved the company’s cybersecurity strategy?
• How does the board ensure that the company is organized appropriately to address cybersecurity risks? Does management have the skill sets it needs?
• How does the board evaluate the effectiveness of the company’s cybersecurity efforts?
• When did the board last discuss whether the company’s disclosure of cyber risk and cyber incident is consistent with SEC guidance?

In its third simulated test of the security of the power grid, the North American Reliability Corporation (“NERC”) reported general progress across the electric utility industry in defending against physical and cyber threats, while also identifying several areas for further improvement.

The NERC exercise, dubbed GridEx III, took place over two days in November 2015 and involved more than 4,400 individuals from 364 industry, law enforcement and government organizations across the United States, Canada and Mexico. The main objectives of the exercise were to test crisis response and recovery, improve communication, identify problem areas and engage senior-level leadership in the organizations involved.

On March 30 through April 1, 2016, the 2016 Nuclear Industry Summit meetings took place in Washington D.C. In the nuclear industry, the issue of cybersecurity has grown steadily in importance over the past decade. This has been most apparent in the increasing attention and effort paid to cyber-based threats under the biennial Nuclear Industry Summit and its international meetings.

Team helps companies devise legal strategies to enhance security and mitigate threat risk.

On April 4, 2016, Hunton & Williams LLP announced the formation of a Cyber and Physical Security Task Force to assist companies in minimizing the risks and consequences of a serious security incident. The task force is being led by global privacy and cybersecurity head Lisa Sotto, cybersecurity partner Paul Tiao, and energy partner Kevin Jones, and includes lawyers from a wide range of practice groups within the firm.

On March 18, 2016, a report was released by a joint team from the North American Electric Reliability Corporation’s Electricity Information Sharing Analysis Center and SANS Industrial Control Systems. According to the report, the cyber attack against a Ukrainian electric utility in December 2015 that caused 225,000 customers to lose power for several hours was based on months of undetected reconnaissance that gave the attackers a sophisticated understanding of the utility’s supervisory control and data acquisition networks.

Recently, the U.S. Department of Health and Human Services Office for Civil Rights (“OCR”) published two guidance documents related to HIPAA compliance. To help mobile app developers understand HIPAA compliance obligations, OCR published guidance on the use of mobile health apps (the “Health App Guidance”). OCR also released a crosswalk (the “Crosswalk”) that maps the National Institute of Standards and Technology (“NIST”) Framework for Improving Critical Infrastructure Cybersecurity Framework (the “NIST Cybersecurity Framework”) to the HIPAA Security Rule.

On February 16, 2016, California Attorney General Kamala D. Harris released the California Data Breach Report 2012-2015 (the “Report”) which, among other things, provides (1) an overview of businesses’ responsibilities regarding protecting personal information and reporting data breaches and (2) a series of recommendations for businesses and state policy makers to follow to help safeguard personal information.

On February 16, 2016, the Department of Homeland Security (“DHS”), in collaboration with other federal agencies, released a series of documents outlining procedures for both federal and non-federal entities to share and disseminate cybersecurity information. These documents were released as directed by the Cybersecurity Act of 2015 (the “Act”), signed into law on December 18, 2015. The Act outlines a means by which the private sector may enjoy protection from civil liability when sharing certain cybersecurity information with the federal government and private entities. These documents represent the first steps by the executive branch to implement the Act.

On February 9, 2016, President Obama signed an Executive Order establishing a permanent Federal Privacy Council (“Privacy Council”) that will serve as the principal interagency support structure to improve the privacy practices of government agencies and entities working on their behalf. The Privacy Council is charged with building on existing interagency efforts to protect privacy and provide expertise and assistance to government agencies, expand the skill and career development opportunities of agency privacy professionals, improve the management of agency privacy programs, and promote collaboration between and among agency privacy professionals.

On December 30, 2015, the Department of Defense (“DoD”) issued a second interim rule (80 F. R. 81472) that extends the deadline by which federal contractors must implement the new cybersecurity requirements previously issued by the agency.  This extension pushes back the compliance deadline to December 31, 2017.

On December 16, 2015, leaders in the U.S. House of Representatives and Senate released a $1.1 trillion omnibus spending bill that contained cybersecurity information sharing language that is based on a compromise between the Cybersecurity Information Sharing Act, which passed in the Senate in October, and two cybersecurity information sharing bills that passed in the House earlier this year. Specifically, the omnibus spending bill included Division N, the Cybersecurity Act of 2015 (the "Act"). 

On December 7, 2015, European negotiators reached an agreement on the draft text of the Network and Information Security Directive (the “NIS Directive”), the first pan-EU rules on cybersecurity. The NIS Directive was first proposed by the European Commission on February 7, 2013, as part of its cybersecurity strategy for the European Union and aims to ensure a uniform level of cybersecurity across the EU.

Hunton & Williams LLP’s Aaron Simpson, partner in the firm’s Global Privacy and Cybersecurity practice, and Adam Solomon, associate, co-authored an article in Pratt’s Privacy & Cybersecurity Law Report entitled Dealmakers Ignore Cyber Risks At Their Own Peril.

On October 27, 2015, the U.S. Senate passed S.754 - Cybersecurity Information Sharing Act of 2015 (“CISA”) by a vote of 74 to 21. CISA is intended to facilitate and encourage the sharing of Internet traffic information between and among companies and the federal government to prevent cyber attacks, by giving companies legal immunity from antitrust and privacy lawsuits. CISA comes in the wake of numerous recent, high-profile cyber attacks.

When novelist William Gibson said, “[t]he future is already here, it’s just not very evenly distributed,” he may have had innovation like blockchain technology in mind. In the near future, blockchain may become the new architecture of a reinvented global financial services infrastructure. The technology – a distributed, consensus-driven ledger that enables and records encrypted digital asset transfers without the need of a confirming third party – is revolutionary to global financial services, whose core functions include the trusted intermediary role (e.g., payment processor, broker, dealer, custodian).

On September 22, 2015, the Securities and Exchange Commission (“SEC”) announced a settlement order (the “Order”) with an investment adviser for failing to establish cybersecurity policies and procedures, and published an investor alert (the “Alert”) entitled Identity Theft, Data Breaches, and Your Investment Accounts.

On September 15, 2015, the Office of Compliance, Inspections and Examinations (“OCIE”) at the U.S. Securities and Exchange Commission (“SEC”) issued a Risk Alert outlining its latest cybersecurity examination priorities for SEC-registered broker-dealers and investment advisers.

On August 26, 2015, the U.S. Department of Defense (“DoD”) published an interim rule entitled Defense Federal Acquisition Regulation Supplement: Network Penetration Reporting and Contracting for Cloud Services (DFARS Case 2013–D018) (the “Interim Rule”), that streamlines the obligations for contractors to report network penetrations and establishes DoD requirements for contracting with cloud computing service providers. The Interim Rule amends the information security contracting framework set forth in the Defense Federal Acquisition Regulation Supplement (“DFARS”) to implement section 941 of the National Defense Authorization Act (“NDAA”) for Fiscal Year (“FY”) 2013 and section 1632 of the NDAA for FY 2015, both of which impose cyber incident reporting obligations on contractors.

On July 16, 2015, the Federal Energy Regulatory Commission (“FERC”) issued a new Notice of Proposed Rulemaking (“NOPR”) addressing the critical infrastructure protection (“CIP”) reliability standards. The NOPR proposes to accept with limited modifications seven updated CIP cybersecurity standards. The NOPR also proposes that new requirements be added to the CIP standards to protect supply chain vendors against evolving malware threats and addresses risks to utility communications networks.