Tag: NYDFS

New York Department of Financial Services Announces $5 Million Penalty in Most Recent Cybersecurity Enforcement Action

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On June 23, 2022, the New York State Department of Financial Services (NYDFS) announced the entry of a Consent Order in connection with its most recent cybersecurity enforcement action, which included a $5 million monetary penalty against Carnival Cruise Line, Princess Cruise Lines, Holland America Line, Seabourn Cruise Line, and Costa Cruise Lines (“Carnival Companies”), for violations of NYDFS’s Cybersecurity Regulation, 23 NYCRR Part 500 (“Part 500”). In addition to the $5 million monetary penalty, the Carnival Companies also surrendered their insurance producer licenses and agreed to cease selling insurance to residents of New York.

According to the Consent Order, between 2019 and 2021, the Carnival Companies were the subject of four separate cybersecurity events, including ransomware and phishing attacks. All four of the cybersecurity events led to the exposure of nonpublic personal information (NPI) of both consumers and employees, including such information as names, addresses, birth dates, passport numbers, and in some instances, other sensitive information such as social security numbers and health information.

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New York Department of Financial Services Issues New Guidance on Multi-Factor Authentication and Cybersecurity Frameworks

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With cyberattacks continuing to plague the financial services industry, the New York Department of Financial Services (NYDFS) recently released new guidance for regulated entities related to the use of Multi-Factor Authentication (MFA) and cybersecurity frameworks.

On December 7, 2021, NYDFS issued a formal Industry Letter entitled Guidance on Multi-Factor Authentication. According to the Industry Letter, MFA “is an essential part of cybersecurity hygiene . . . which is why it was one of the few technical controls explicitly required by” the NYDFS Cybersecurity Regulation, 23 NYCRR Part 500 (the Cybersecurity Regulation). However, the Industry Letter goes on to note that “MFA weaknesses are the most common cybersecurity gap exploited at financial services companies,” most often due to MFA “being absent, not fully implemented, or configured improperly.” Specifically, NYDFS noted that, from January 2020 to July 2021, more than 18.3 million consumers were impacted by cybersecurity incidents reported to NYDFS that were linked to an MFA failure.

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Fall Cybersecurity Enforcement Update: State and Federal Regulators Increase Scrutiny on Victims of Cyberattacks

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We have written here previously about the dramatic increase in cyberattacks on companies of all types since the start of the COVID-19 pandemic. Indeed, by some estimates, ransomware attacks have increased over 90% during the first half of 2021 compared to the same period last year. As these and other types of cyberattacks have increased, various federal and state regulators have correspondingly stepped up efforts to investigate and bring enforcement actions – which often include large fines – against companies that are perceived to have been negligent in their cybersecurity efforts. Two of the most active agencies in cybersecurity enforcement have been the New York Department of Financial Services (NYDFS) and the United States Securities & Exchange Commission (SEC), both of which have made important announcements regarding cybersecurity compliance in the past few months.

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Faegre Drinker on Law and Technology Podcast: An Interview With Cybersecurity Regulators

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The regulation of cybersecurity remains a new and rapidly evolving space — and regulatory activity and priorities can be somewhat opaque to outside observers. In this special episode of the Faegre Drinker on Law and Technology Podcast, host Jason G. Weiss shares a discussion led by Faegre Drinker’s Peter Baldwin, who sat down with Brent Wilner, senior advisor to the Securities and Exchange Commission’s (SEC) Cyber Unit, and Justin Herring, leader of the New York Department of Financial Services’ (NYDFS) Cybersecurity Division. The two guests share their insights on each agency’s priorities in cybersecurity, data protection and enforcement.

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New York Department of Financial Services Issues Report on SolarWinds Cyberattack

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On April 15, 2021, the New York Department of Financial Services (NYDFS) issued a report on the recent SolarWinds cyberattack. A copy of the report is available here. NYDFS called the attack a “wake-up call” to regulated financial institutions and insurers that should cause them to immediately assess and, if necessary, improve their own cybersecurity posture in order to avoid victimization in future attacks.

NYDFS characterized the SolarWinds attack as a “widespread, sophisticated espionage campaign” by Russian foreign intelligence actors that resulted in “the most visible, widespread, and intrusive information technology supply chain attack” successfully completed to date. According to the report, the attack opened back doors into thousands of organizations around the United States and involved the theft of sensitive data from over 100 private sector companies, as well as at least nine federal agencies. NYDFS noted ominously that the attack highlighted the obvious “vulnerability to supply chain attacks” within the financial services industry.

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New York Department of Financial Services and National Securities Corporation Agree to $3 Million Settlement in Cybersecurity Enforcement Action

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Earlier this month, the New York State Department of Financial Services (NYDFS) announced a settlement and consent order with National Securities Corporation (National Securities) for $3 million in connection with National Securities’ violations of NYDFS’s Cybersecurity Regulation, 23 NYCRR Part 500 (Part 500).

National Securities sells life insurance, accident and health insurance, and variable life/variable annuities insurance. As part of its day-to-day operations, National Securities collects personal data from its customers.

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