On July 26, the Securities and Exchange Commission (“SEC”) finalized a much anticipated rule addressing cybersecurity risk management, strategy, governance, and incident disclosure. Public companies registered with the SEC will soon be required to report material cybersecurity incidents within four business days of determining the incident to be material and to make periodic disclosures regarding cybersecurity risk management, strategy, and governance.
Author: Andy Taylor
Andy Taylor counsels clients in all stages of litigation, including pleadings, motions, discovery, trials, appeals and alternative dispute resolution. He has concentrations in commercial disputes, data privacy and cybersecurity litigation, and international arbitration.
Cybersecurity Enforcement Update: New York Department of Financial Services Announces Amended Cybersecurity Regulations and Latest Multi-Million-Dollar Cybersecurity Enforcement Settlement & FTC Settles Matter Involving Unsecured Genetic Data
Recent enforcement actions and announcements show that state and federal regulators are continuing to focus intensely on cybersecurity and data protection. Notably, the New York Department of Financial Services (“NYDFS”) recently issued the latest proposed amendments to its Cybersecurity Regulations. NYDFS also recently announced a $4.25 million cybersecurity consent order with OneMain Financial Group, LLC (“OneMain”). In addition, the U.S. Federal Trade Commission (“FTC”) recently announced a settlement with genetic testing company 1Health.io (“1Health”).
New Proposed Amendments to NYDFS Cybersecurity Regulations
The NYDFS recently announced updated proposed amendments to its industry leading cybersecurity regulations. These latest amendments follow public comments on earlier proposed amendments circulated in November 2022. If adopted, companies regulated by NYDFS would face several new requirements, including the following:
New York Department of Financial Services Levies $1.2 Million Fine on Cryptocurrency Platform for Violations of Cybersecurity Regulations
A recent consent order between the New York State Department of Financial Services (“NYDFS”) and cryptocurrency trading platform, bitFlyer USA (“bitFlyer”), shows that the NYDFS continues to utilize an aggressive enforcement posture with respect to cybersecurity for regulated financial services companies. Notably, the bitFlyer consent order and other recent consent orders demonstrate that NYDFS is no longer waiting for regulated entities to experience a cyber-attack before commencing an enforcement action, and, instead, is using routine examinations to uncover and prosecute companies for failing to comply with the NYDFS’s cybersecurity regulations.
Background
In 2017, the NYDFS promulgated first-of-its-kind regulations establishing cybersecurity requirements for financial services companies. 23 NYCRR Part 500. These regulations were amended once and a proposed second amendment was published in late 2022, with final amendments expected to be adopted sometime later this year.