John Reed Stark

The Capital One data hack has attracted a great deal of attention, not least because of the size and extent of the breach, but also because the hacker apparently managed to steal data from The Cloud. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a closer look at this aspect of the Capital One data breach and asked whether Amazon, the cloud service provider, can be held liable for the hack? Stark takes a close look at the technology involved and analyzes the potential liability issues between Capital One, on the one hand, and Amazon, on the other. A version of this article originally appeared on Securities Docket. My thanks to 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 Guest Post: Is Amazon Liable for the Capital One Hack?

In addition to all of the other risks, liabilities and exposures arising from cybersecurity concerns, you can now add the possibility of a whistleblower action for cybersecurity fraud. According to a July 31, 2019 press release from counsel for the whistleblower involved (here), Cisco Systems has agreed to an $8.6 million settlement in what the press release claims is the “first cybersecurity whistleblower case ever successfully litigated under the False Claims Act.” Cisco has agreed to pay the amount to settle allegations that the company knowingly sold vulnerable and defective video surveillance software to federal, state, and local government agencies, exposing the systems to unauthorized access. As discussed below, this development even further expands the range of concerns companies must take into account when assessing their cybersecurity exposures. An August 12, 2019 memo from the Jones Day law firm about the settlement and its implications can be found here.
Continue Reading Cybersecurity Whistleblower Claim under the False Claims Act Settled

John Reed Stark

The news of the recent massive data breach at Capital One made the front pages of the business sections of newspapers across the country. The hack has drawn attention not just because of the magnitude of the hack, but also because the hackers apparently managed to steal data from The Cloud. The Capital Data breach represents a “wake-up call” for boards of directors, according to the following guest post from John Reed Stark. John is President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement. A version of this article originally appeared on Securities Docket. My thanks to John for allowing me to publish his 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 John’s article.
Continue Reading Guest Post: What the Capital One Hack Means for Board of Directors

Under the Delaware Chancery Court decision in the Caremark case, directors can be liable for failures in their oversight duties – that is, their duties to monitor the company and its functions. Lawsuits alleging a violation of the duty of oversight are notoriously challenging for plaintiffs. However, in the recent Marchand v. Barnhill case, the Delaware Supreme Court reversed the Chancery Court’s dismissal of a Caremark liability case and allowed the case to proceed against the board of an ice cream manufacturer that experienced a deadly listeria outbreak. Caremark liability cases remain difficult to plead and prove, but the Marchand decision nevertheless has important implications for director liability for breaches of their duty of oversight.
Continue Reading Recent Delaware Caremark Duty Decision Underscores Board Cyber and Privacy Liability Risks

Paul Ferrillo
Christophe Veltsos

In the following guest post, Paul Ferrillo and Christophe Veltsos consider the implications of the recently announced bankruptcy of the corporate parent of a medical billing company following a high-profile date breach at the billing company. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. Chris is a professor in the Department of Computer Information Science at Minnesota State University, Mankato where he regularly teaches Information Security and Information Warfare classes. I would like to than Paul and Chris for their willingness to allow me to publish their 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 and Chris’s article.
Continue Reading Guest Post: Buckle up Directors: Cybersecurity Risk and Bankruptcy Risk Are Not Mutually Exclusive

One of the most watched and commented on corporate and securities litigation trends over the last several years has been the rise of management liability related lawsuits arising from cybersecurity-related incidents. While there has never been the volume of cases that some commentators expected, there have been a number of cases filed. The latest of these lawsuits is the securities class action lawsuit filed this week against FedEx, in which the plaintiff shareholder alleges the company did not fully disclose the extent of the disruption at its European operation after it was hit with the NotPetya malware virus in June 2017. A number of the allegations in the new FedEx complaint are similar to those raised in prior cybersecurity-related securities suit, suggesting some of the factors that might lead to this type of cybersecurity follow-on lawsuit. A copy of the complaint, filed in the Southern District of New York on June 26, 2019, can be found here.
Continue Reading FedEx Hit with Cyber Attack-Related Securities Suit

In the following guest post, Paul Ferrillo and Chris Veltsos take a look at the latest consequences that companies are now facing following a data breach – a rating agency downgrade. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. Chris is a professor in the Department of Computer Information Science at Minnesota State University, Mankato where he regularly teaches Information Security and Information Warfare classes. I would like to thank Paul and Chris for allowing me to publish their 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 article. Here is Paul and Chris’s article.
Continue Reading Guest Post: Rating Agency Downgrades Following Cyber Breaches — Are They the Canary in the D&O Coal Mine?

Paul Ferrillo
Christophe Veltsos

In the second part of a three part series, Paul Ferrillo and Christophe Veltsos explain how cyber risk assessments can provide value. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. Chris is a professor in the Department of Computer Information Science at Minnesota State University, Mankato where he regularly teaches Information Security and Information Warfare classes.  The first article in their series can be found here. In a forthcoming third article, the authors will address the technical tools side of cyber assessment, as opposed to people/processes/governance. I would like to thank Paul and Chris for their willingness to allow me to publish their article as a guest post. 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. Paul and Chris’s article is set out below.
Continue Reading Guest Post: Cyber Risk Health Factors Case Study — Technology Alone Can’t Fix Security

Paul A. Ferrillo
Christophe Veltsos

The threats to data security are substantial. Every organization faces some level of cyber risk. So how do we get better at cybersecurity? That is the question that Paul Ferrillo and Christophe Veltsos ask in the following guest post. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. Chris is is a professor in the Department of Computer Information Science at Minnesota State University, Mankato where he regularly teaches Information Security and Information Warfare classes. I would like to thank Paul and Chris for their willingness to allow me to publish their article as a guest post. 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. Paul and Chris’s article is set out below. Please be sure to also see the item at the end of the post about International Women’s Day.
Continue Reading Guest Post: The Missing Link of Cybersecurity — Time for a Cyber Risk Check-Up

Cybersecurity threats are on the rise. Companies that find themselves hit with data breaches face a number of challenges, including in particular the challenge of responding to strict breach disclosure and notification requirements. In the following guest post, Paul A. Ferrillo, a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice, takes a look at the steps the companies can take before they are breached to be better positioned to respond to the notification requirements in the event of a breach. I would like to thank Paul for allowing me to publish his article as a guest post. 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 Guest Post: Beat the Clock: 5 Important Steps to Deal with Today’s Complicated Cyber Breach Disclosure World