On November 13, 2018, Ballard Spahr lawyers presented a webinar on the SEC’s recent “Report of Investigation” into “business email compromises” affecting public companies.

As noted in our prior blog post, the Report was prompted by the SEC’s investigation into whether nine public companies violated U.S. securities laws “by failing to have sufficient accounting controls” to prevent approximately $100 million in losses as a result of business email compromises targeting their personnel. The SEC investigated whether these companies violated Sections 13(b)(2)(B)(i) and (iii) of the Securities and Exchange Act of 1934. Although declining to pursue enforcement actions against the companies, the SEC emphasized its recent cybersecurity guidance, advising public companies that “[c]ybersecurity risk management policies and procedures are key elements of enterprise-wide risk management, including as it relates to compliance with federal securities laws.” (See our prior alert and blog post regarding the Interpretive Guidance). Continue Reading Listen to Our Webinar on “The SEC’s Special Report on Business Email Compromises: What It Means and What You Should Do”

The fallout from the Yahoo data breaches continues to illustrate how cyberattacks thrust companies into the competing roles of crime victim, regulatory enforcement target and civil litigant.

Yahoo, which is now known as Altaba, recently became the first public company to be fined ($35 million) by the Securities and Exchange Commission for filing statements that failed to disclose known data breaches. This is on top of the $80 million federal securities class action settlement that Yahoo reached in March 2018—the first of its kind based on a cyberattack. Shareholder derivative actions remain pending in state courts, and consumer data breach class actions have survived initial motions to dismiss and remain consolidated in California for pre-trial proceedings. At the other end of the spectrum, a federal judge has balked at the U.S. Department of Justice’s (DOJ) request that a hacker-for-hire indicted in the Yahoo attacks be sentenced to eight years in prison for a digital crime spree that dates back to 2010. Continue Reading The Hacked & the Hacker-for-Hire: Lessons from the Yahoo Data Breaches (So Far)

The Pennsylvania Supreme Court recently issued a sweeping ruling “that accessing any information from a cell phone without a warrant” violates the Fourth Amendment to the United States Constitution. In Commonwealth v. Fulton, the Court suppressed the warrantless search of the contents of a ‘flip phone’ and reversed a murder conviction that flowed from the unlawful search.  The Supreme Court held that the Superior Court’s decision contravened U.S. Supreme Court precedent in Riley v. California and United States v. Wurie, 134 S. Ct. 2473 (2014), holding that searches of cell phones generally require a warrant.

In June 2010, Philadelphia Police arrested I. Dean Fulton and three others on suspicion of unlawful drug activity and gun possession. They seized Fulton’s “smart phone” from his body at the time of the arrest.  They subsequently obtained a search warrant for the vehicle Fulton and the others were in at the time of their arrests.  That search turned up a firearm, a holster, three cell phones and other property.  The cell phones – which included one ‘flip phone’ later connected to Fulton –were provided to the Homicide Division, which was investigating a recent drug-related murder.  Continue Reading Pennsylvania Supreme Court: If You Want to Search a Cell Phone, Get a Warrant!

The U.S. Supreme Court heard oral arguments this morning in United States v. Microsoft, No. 17-2, which presents the question whether a United States court may issue a search warrant to a U.S.-based electronic communications service for email account data held on a server outside of the United States.

Here’s the transcript of this morning’s oral argument.  We will blog more about this case — and the important issues at stake — down the road.