When to Disclose Data Breaches under Federal Securities Laws

Source: CNBC

By Steven Wittenberg

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Hacking and cybercrime are on the rise.[1] From 2013 to 2015, twenty major data breaches were reported at Fortune 100 companies.[2] Publicly traded companies who have securities disclosure obligations should be aware of their duties under the federal securities laws when it comes to data breaches and hacks.[3]

In 2011, the SEC Division of Corporation Finance issued guidelines for cyber incidents.[4] The SEC stated, “[A] number of disclosure requirements may impose an obligation on registrants to disclose such [cyber] risks and incidents,” although there are no explicit requirements referring to data breaches.

While major data breaches may be material to reasonable investors of public companies, there is no duty to promptly disclose the occurrence of cyber incidents unless there have been selective disclosures, previous misstatements or circumstances making the omission of the hack misleading.[5] The federal … Read the rest

A Fiduciary Duty Requirement for Financial Professionals is Great, in Theory

By: Joe Zender

On April 6, the Department of Labor released a new regulation pertaining to the duties owed by financial advisors to their clients.[1] The new regulation, which is scheduled to go into effect on January 1, 2018, transforms fundamental aspects of the financial services industry.[2]  The new rule, called a fiduciary duty rule, requires financial professionals to act in the best interest of their clients.[3] While a savvy investor or an ethical advisor may have already required this as part of their relationships, many retail investors do not know the ramifications of such a duty. The new rule forces this type of duty.  Opponents of the rule argue that the new regulation will increase costs across the financial services industry, which could force small budget investors out of the advising market, during a time when they could use it. At the same time, those who … Read the rest

New York’s Legally Dubious and Harmful Sodium Labeling Scheme

By: Joseph Zender

In September, New York City’s Board of Health (“Board”) passed an ordinance that requires restaurants to post warnings on items on their menus that are have high sodium content.[1] The National Restaurant Association is challenging the new law in state court on the grounds that it is overly burdensome and that it circumvents the legislative process.[2] The new law would require restaurants with more than 15 locations nationwide to place a black triangle next to any item on their menu that contains more than 2,300 milligrams (0.08 ounces) of sodium.[3] Not only is the New York City Board of Health’s move legally dubious by circumventing the legislative process and overly burdening the restaurants, it will also have unintended consequences that will affect the community at large in adverse ways.

The sodium posting requirement is reminiscent of another action by the Board back in 2012, … Read the rest

The Best Offense Is a Good Defense: The Strategic Value of Building a Strong Corporate Culture

By: Matthew Lowe

I. Introduction

In 2014, a University of Virginia Law Professor, Brandon L. Garrett, wrote a book entitled: Too Big to Jail: How Prosecutors Compromise with Corporations. In his book, Garrett inadvertently outlined a strategy for companies to follow, which would allow them to increase morale and productivity while also putting measures in place to avoid damaging litigation. Relying on the development and successful implementation of a healthy, viable corporate culture, the benefits of this strategy should serve as the catalyst for wide scale adoption.

II. Background

In the 1930s, a Republican attorney by the name of Conrad Printzlien left his position in the district attorney’s office in the Eastern District of New York to work as a probation officer.[1] While this voluntary career shift meant a 50% salary reduction, Printzlien accepted the position partially due to the urging of the court, but also because he … Read the rest

The Overreach of the E.P.A.: Fact or Fiction?

 

 

            Earlier this month the House Energy and Commerce Committee passed a bill, the “Energy Tax Prevention Act of 2011,” which, if it becomes law, would effectively halt the Environmental Protection Agency’s proposed program to regulate greenhouse gas emissions.  This is one of many attempts in an ongoing campaign by Republicans to limit the power of the EPA to make and enforce regulations related to greenhouse gas emissions.  They are attempting this through budgetary control measures as well as by attempting to strip the EPA of its regulatory authority in this area through legislation. There appears to be an intentional effort to cast this as a battle between the legislative and executive branches.  However, this is actually a battle royal including all three branches of the federal government, as well as many state, local, and private organizations.  It is important to look at the recent history of this fight … Read the rest