Paul A. Ferrillo

In the following guest post, Paul A. Ferrillo takes a look at the recent findings that the SEC Office of Compliance, Inspections and Examinations issue with respect to its cybersecurity examinations of registered investment advisers and broker dealers. The findings, Paul suggests, provides good guidance from a number of perspectives with regard to cybersecurity governance issues. Paul is a partner with McDermott, Will & Emery. I would like to thank Paul for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Paul’s article.
Continue Reading

One of the areas of significant concern in the global insurance underwriting community is the potential exposures insurers face from “silent cyber” – that is, the coverage of cybersecurity-related losses under traditional insurance policies that are not expressly designed to cover cyber losses. In a recent ruling in an insurance coverage dispute in which a small business sought insurance coverage for its losses following a ransomware attack, a Maryland federal court judge, applying Maryland law, held that the company’s business owner’s policy (BOP) covered the damages the company incurred.   The ruling highlights the potential coverage available for companies experiencing cyber-security losses under their traditional insurance policies. As discussed below, there are a number of interesting features to this ruling.
Continue Reading

One of the hot topics for mainstream P&C insurers these days is dealing with “silent cyber” – that is, the coverage for cyber-related losses in traditional property and casualty insurance policies. There are a number of initiatives underway in the insurance underwriting community as insurers try to address silent cyber. However, as noted in an interesting January 14, 2020 memo from the Covington law firm entitled “The Noise About ‘Silent Cyber’ Insurance Coverage” (here), these initiatives have important implications for policyholders. Among other things, these initiatives potentially could result in a gap in policyholders’ coverage for cyber-related losses, as discussed below.
Continue Reading

Plaintiffs seeking to pursue negligence claims for the disclosure of their personal information in a data breach often face hurdles in pleading a sufficient injury. The claimants’ failure to plead a sufficient injury frequently is the basis for dismissal. However, in a very interesting recent decision, the Georgia Supreme Court reversed the intermediate appellate court’s affirmance of the dismissal of the plaintiffs’ data breach claims, finding that the claimants had sufficient standing to assert their claims where they alleged that the disclosure of their personal information left them at an “imminent and substantial risk of identity theft.” As discussed below, the Court’s holding arguably makes data breach claims under Georgia law less susceptible to dismissal. However, as also discussed below, there are important limitations to the Court’s holding.
Continue Reading

John Reed Stark

In the following guest post, John Reed Stark takes a look at the troubling rise of ransomware attacks, and the disturbing relationship between ransomware attacks and bitcoin. John is the President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
Continue Reading

Umesh Pratapa

As many insurance industry observers know, one of the great concerns within the industry now is the possible impact of “silent cyber” – that is, the potential for cybersecurity-related coverage outside of purpose-built cyber insurance policies. In the following guest post, Umesh Pratapa takes a look at the silent cyber phenomenon.  A version of this article previously was published on Umesh’s website (here). Umesh is an independent insurance consultant based in India. I would like to thank Umesh for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Umesh’s article.
Continue Reading

Paul Ferrillo

As regular readers of this blog know, one of the many consequences that may follow for a company that experiences a cybersecurity incident is that it could get hit with a D&O claim. In the following guest post, Paul Ferrillo examine whether the increasing move toward cybersecurity-related D&O claims could in turn lead to an increase in prior Delaware Section 220 books and records inspection demands. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. I would like to thank Paul for allowing me to publish his guest post as an article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Paul’s article.
Continue Reading

As I have noted in prior posts, a recurring challenge many organizations face these days is the threat of “payment instruction fraud,” also sometimes called “social engineering fraud” or “payment impersonation fraud.” In these schemes scammers use official-seeming email communications to induce company employees to transfer company funds to the imposters’ account. Among the many issues arising when these kinds of scams occur is the question of insurance coverage for the loss. Some victims may expect that their cyber liability insurance will cover their loss.

However, as Lauri Floresca of Woodruff-Sawyer points out in her December 5, 2019 post on her firm’s blog entitled “Payment Impersonation Fraud: Why is This Common Cyber Problem Not a Valid Cyber Claim” (here), these  claims rarely involve the kind of cyber security breach required to trigger cyber insurance coverage. Accordingly, there are other steps well-advised companies may want to take to try to protect themselves from these kinds of losses.
Continue Reading

Many of you probably saw the news this past week that Target has filed a lawsuit against one of its insurers over losses the company sustained in connection with the company’s 2014 data breach. The Target lawsuit is the latest in a series of high profile insurance battles in which companies are seeking to recoup losses resulting from cybersecurity incidents. However, as my friend, colleague, and Cyber insurance maven Mickey Estey pointed out to me, in its lawsuit Target is in fact not seeking to recover its claimed losses under a cyber insurance policy; rather, in its latest lawsuit, Target is seeking to recover for certain of its losses under its general liability policy. The Target lawsuit is only the latest in a series of high-profile insurance disputes in which companies that have sustained losses from a cybersecurity event are seeking coverage under a variety of different types of policies.
Continue Reading

One of the more challenging issues businesses must confront as wrongdoers have turned Internet tools into criminal devices has been the rising threat of payment instruction fraud, or, as it is sometimes called, social engineering fraud. Along with these crimes have come vexing questions of insurance coverage for the ensuing losses. Courts have struggled to determine whether or not payment instruction fraud losses are covered under Crime policies. A recent case in the Southern District of New York raises the question whether a payment instruction fraud loss is covered not under a Crime policy but rather under insurance policy containing both E&O and Cyber coverages.
Continue Reading