Year: 2018

U.S. Congress Approves CLOUD Act for Data Stored Overseas

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On March 23, 2018, Congress passed the “Clarifying Overseas Use of Data Act,” also known as the “CLOUD Act” (H.R. 4943, S. 2383), a new U.S. law that will have a dramatic effect on the United State government’s control over and access to data stored overseas.  The CLOUD Act was introduced to the U.S. Senate and House of Representatives on February 6, 2018, as part of a $1.3 trillion omnibus spending bill.  The bill passed both houses of Congress on March 23, 2018, and was signed into law by the President the next day.

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FCC to Wade into the US Telecom Supply Chain in the Name of National Security

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The Federal Communications Commission (FCC) made headlines on March 26 when Chairman Ajit Pai proposed that the FCC bar several companies, in the name of national security, from participation in the FCC programs. The FCC plans to vote on this proposal at its next Open Meeting on April 17, 2018.

The proposal was prompted by letters he received from 18 Congressional leaders last December, which asserted the potential for compromised security of U.S. telecommunications networks through insecure equipment supply chains required FCC consideration. Chairman Pai responded to the Congressional letters by noting that FCC itself does not purchase or use the equipment from the named companies and would not intend to take service from a service provider that does. The Chairman however did not stop there; he is proposing that certain companies be barred from participating in the Universal Service Fund (USF) program that subsidizes carrier equipment.

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SEC Freezes $27 Million Related to a Blockchain/Cryptocurrency Acquisition

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The Securities and Exchange Commission (SEC) obtained a court order freezing more than $27 million in proceeds from alleged illegal distributions and sales of restricted shares of a public company , and charged the company, its CEO, and three other affiliated individuals on April 6, 2018. That same day, the Nasdaq Stock Market  halted trading in the company’s stock.

The SEC’s complaint alleges that shortly after the company began trading on the Nasdaq Stock Market and announced the acquisition of a purported blockchain-empowered cryptocurrency business,  its stock price rose dramatically until its market capitalization exceeded $3 billion. The SEC further alleges that the CEO and the three other individual defendants then illegally sold large blocks of their restricted shares to the public while the stock price was excessively elevated and that they collectively reaped more than $27 million in profits.

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Data Breach Notification Laws Now Enacted in All 50 States

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South Dakota and Alabama are the last of the 50 states to have enacted breach notification laws, along with Washington, D.C., Guam, Puerto Rico and the Virgin Islands. South Dakota became the 49th state to enact a data breach notification law when Governor Dennis Daugaard signed Senate Bill 62 into law on March 21. It goes into effect on July 1, 2018. On March 28, 2018, Alabama Governor Kay Ivey signed into law Alabama Senate Bill 318, effective May 1, 2018. Below are the parameters of these new data breach notification laws.

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Attorneys General Call for Congress to Avoid Possible Federal Preemption of State Data Breach and Security Laws

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The draft bill, “Data Acquisition and Technology Accountability and Security Act,”  has led  32 state attorneys general to release a letter urging Congress to avoid preempting state data breach and data security laws.

On February 16, 2018, Representatives Blaine Luetkemeyer (R-MO) and Carolyn Maloney (D-NY) introduced the  draft bill in the House of Representatives, which would establish, (i) sweeping standards for data protection across various industries, (ii) federal post-data breach notification requirements, and (iii) establish a process that covered entities must follow to notify law enforcement, regulators, and victims following different types of data breaches.

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