Forensic Update

Reflections on information management within the legal and regulatory arena

Posts Tagged ‘data privacy’

Laptop stolen from employee vehicle = 20 years of FTC Audits for Employer…

Posted by Johnny Lee on February 1, 2013


The news of data breaches has certainly become maddeningly commonplace in recent years.  Many industries have been slow to adopt even the most rudimentary controls about securing media that is highly portable, such as thumb drives, laptops, mobile devices, and the like.

Perhaps as antidote to that tardy adoption, the Federal Trade Commission (“FTC”) recently announced a settlement with a leading cord blood bank, related to claims that it failed to protect the security of customers’ personal information.  Moreover, the settlement stipulates that this cord blood bank’s inadequate security practices contributed to a breach that exposed the Social Security and financial information of nearly 300,000 consumers.

The FTC claims arose from an incident in December 2010, in which laptops, backup tapes, and other storage media were stolen from an employee’s personal vehicle.  The catch?  None of these storage media were encrypted in any fashion.

This lack of encryption appears to be the linchpin consideration in the FTC’s analysis of culpability.  The cord blood bank must now submit to an annual certification (by an external party) for the next twenty years.  This enforcement action by the FTC will undoubtedly raise the awareness of organizations slow to adopt the perspective that there is wisdom in having policies and procedures in place to safeguard sensitive data.  While these policies and procedures might — and perhaps ought to — vary from industry to industry, certain basics will likely be adopted over time, and I suspect that encryption will rise in adoption as a safeguard even more rapidly than it has in recent years.

For more on the FTC’s settlement announcement, please click here.

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Parting is such tweet sorrow…

Posted by Johnny Lee on May 16, 2012

With humble apologies to The Bard for the headline, a recent story picked up by the The Wall Street Journal chronicles the dismissal of a Chief Financial Officer for his candid and extemporaneous disclosures via Twitter and Facebook.  This is yet another in a long series of headline-grabbing stories related to the perils of un-checked social media gaffes.

The tweeter in question is Gene Morphis who, until quite recently, was the CFO of Francesca’s Holdings Corp.  Through its subsidiary, Francesca’s operates a chain of retail boutiques offering apparel, jewelry, accessories, and gifts to female customers.  The company was founded in 1999, is headquartered in Houston, and has a $1 billion market capitalization.

According to the The Wall Street Journal, Mr. Morphis “maintained a publicly viewable profile on Facebook, authored a blog called ‘Morph’s View’ and maintained a Twitter account under the handle ‘theoldcfo.’  Online, he discussed everything from Christmas to college basketball, and occasionally company doings.”  It was the last point in this list that brings him to our attention.

The Journal reports that Morphis posted information related to his dealings with Francesca’s board, an investor road show, earnings calls, and other corporate interactions.  Following an internal investigation led by outside counsel, the company has stated that it terminated Morphis “for cause” and that it is “disappointed by this situation but we expect our executives to comply with all company policies.”

While this specific fact pattern is not familiar to this editor, we can perhaps expect similar examples to come.  According to a recent survey from the Society for Human Resource Management, only two in five employers have formal social-media policies.  Perhaps just as telling, of those organizations with formal policies, one in three have taken “disciplinary action” against an employee in the past year.

The take-away?  Social media technologies represent a significant source of both benefit and risk to organizations today.  Examining these benefits and risks is becoming more and more crucial, and placing these benefits and risks within the context of existing compliance frameworks is becoming the only way to proportionally manage the same.

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ForensicUpdate Editor to present on two CyberSecurity Panels…

Posted by Johnny Lee on May 7, 2012

This year’s AccessData User’s Conference will be help in Las Vegas. This conference brings together world-class instruction from real-world industry practitioners, and it provides a wealth of information related to cybersecurity, forensics, and eDiscovery.

This three-day conference will include luminaries from around the world, leading sessions and delving into the complexities related to acquiring, analyzing, and managing data in fast-paced environments and situations. There is a variety of break-out sessions and hands-on laboratories designed to improve the participants’ skills and to apply what they have learned.

ForensicUpdate editor, Johnny Lee, will participate in two panel discussions: “Data Governance and eDiscovery” and “Data Breaches.”  Click here for more details.

Posted in Computer Forensics, Data Governance, eDiscovery, Information Security, Investigations, Privacy, Records Retention, Social Networking | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Comments Off on ForensicUpdate Editor to present on two CyberSecurity Panels…

DLA Piper publishes global handbook on Data Privacy Laws…

Posted by Johnny Lee on April 23, 2012

The safeguarding of personal information by organizations has never been more difficult or more necessary.  This is true not merely because of the relatively unchecked trends of data proliferation and data portability but also because of the increasingly complicated legal and regulatory landscape.

Organizations of all sizes are struggling with this, but multi-national companies have a unique set of challenges in trying to identify —much less reconcile — the myriad of rules, regulations, and laws related to the protection of personal data.  This is what makes DLA Piper’s subject contribution such a welcome addition to the compliance literature.

The DLA Piper Information Law Team have published a handbook with “an overview of the applicable privacy and data protection laws and regulations across 58 different jurisdictions, including a section on enforcement.  Edited by Cameron Craig, Paul McCormack, Jim Halpert, Kate Lucente, and Arthur Cheuk, the DLA Piper 2011/2012 Data Protection Laws of the World Handbook is available here.”

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2012 Perspectives from the Chief Audit Executive’s office…

Posted by Johnny Lee on April 2, 2012

Grant Thornton’s latest thought leadership in the audit and compliance arena focuses on the perspective of the chief audit executive (“CAE”).  The survey, entitled “Rising to new challenges: The view from the office of the CAE,” includes input from approximately three hundred CAEs from around the United States.

With “promising economic signs emerging, organizational demands are pulling internal audit in new directions.”  This survey captures how CAEs are striving to balance competing goals and initiatives.

This survey also builds up on Grant Thornton’s prior CAE survey from 2011 and “confirms that internal audit is receptive to assimilating newer and broader responsibilities for evaluating emerging risks, ensuring appropriate corporate governance and incorporating technology into internal audit processes.”  Click here to read the executive summary of this report.

Posted in Announcement, Data Governance, Fraud, Privacy | Tagged: , , , , , , , , , , , , , , , | Comments Off on 2012 Perspectives from the Chief Audit Executive’s office…

Forensic Update editor presenting at 7th Annual Fraud Summit…

Posted by Johnny Lee on March 20, 2012

The seventh-annual “Fraud Summit” will be held later this month at the University of Texas at Dallas.  This summit is a collaboration among the Dallas Chapter of the Institute of Internal Auditors, the North Texas Chapter of ISACA, and the Dallas Chapter of the Association for Certified Fraud Examiners.

This two-day conference will include “numerous sessions with dynamic presenters on current fraud topics,” including a variety of break-out sessions designed to improve the participants’ fraud-detecting skills and to apply what they have learned.  Several sessions will focus upon “advanced fraud techniques and case studies for those looking for more than just the basics.”

ForensicUpdate editor, Johnny Lee, will present on the topic of “Data Governance and eDiscovery.”  Click here for more details.

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Our Porous Periphery…news from the data leakage front

Posted by Johnny Lee on March 5, 2012

A recent study from Harris Interactive indicates that, despite what appear to be known risks, organizations continue to permit high-risk data practices.  The study, commissioned by Imation, surveyed several hundred IT decision-makers throughout the United States and Canada.

According to the study, 91% of organizations allow removable storage devices (e.g., USB drives, external hard drives, smart phones, etc.) on their networks.  Additionally, 81% of organizations report having some policy that mandates the encryption of organizational data when employees are using removable storage devices — though over 65% of organizations report having little or no enforcement of these best practices.  Put differently, despite the well documented risks of highly portable and unencrypted data leaving the building, only 25% of U.S. organizations enforce encryption on removable media.

As if these statistics weren’t staggering in their own rite, 20% of businesses report having no defined action plan to address the specter of data breach.  Worse, these same 20% state that they do not intend to draft such an action plan in the foreseeable future.

For years, the higher risk of data compromise from internal players has been axiomatic.1  While these risks do not always arise from sinister acts, there are virtually no distinctions (either within the press or with regulators and potential plaintiffs) between data breaches that occur for profit versus through negligence.  Like me, the study’s sponsors are surprised by the somewhat cavalier attitude of organizations that are not locking down data as well as perhaps they ought.

1 Q.v., Study from Ponemon Institute & Checkpoint Software (February 2011), entitled “Understanding Security Complexity in 21st Century IT Environments,” which indicates that 75% of organizations report data losses from malicious or negligent insiders.

Posted in Data Governance, ECM, eDiscovery, Information Security, Privacy, Records Retention | Tagged: , , , , , , , , , , , , , , , , , , | Comments Off on Our Porous Periphery…news from the data leakage front

Data Classification — Proactive Gambit against Reactive Inertia

Posted by Johnny Lee on February 28, 2012

Data Classification

Countless times during my career, I’ve been asked why data classification makes financial sense for an organization.  This particular conversation typically arises in the context of a rebuttal to an unpopular project that has been proposed (i.e., one that doesn’t affect the bottom line — at least in a material and self-evident way).

Data classification can mean many things, of course, but from a data security perspective it typically involves the assignment of a sensitivity rating (or level) to various data used by an organization.  The purpose of this assignment is, above all, to avoid “boiling the ocean,” as we consultants like to say.

Whether an organization is responding to a specific regulatory mandate, an active litigation, or merely taking a proactive stance toward its information management lifecycle, properly classifying the data is the first step.  Such classifications (e.g., top secret, secret, confidential, restricted, and unclassified) allow organizations to identify what data an organization is handling on a regular basis, how well it is securing such data, and whether significant risks are being mitigated that relate to same.

While computer applications and appliances exist to help with data classification, ultimately this is a subjective exercise.  Properly done, it includes all strata of the business, incorporates a risk-based approach, and contemplates business, technical, and other points of view.  Only by identifying which data are important to the business, can an organization hope to quantify how expensive and inefficient its one-size-fits-all data management strategy truly is.

While data classification is most often cast in the light of risk-avoidance, there are significant benefits to classifying data that do, in fact, translate to the bottom line.  Indeed, when an organization invests the time to classify its data, there are frequently entire populations of content that are being secured at great cost — though the actual content of these files merits no such security.  These savings alone can pay for a data classification exercise.

Similarly, when organizations truly identify what data are important to their day-to-day operations, a great focus is brought to bear on how those data are created, managed, copied, distributed, and (ultimately) retired.  This heightened awareness likewise has tremendous benefit for companies — whether in heavily regulated industries or not.

Posted in Data Governance, ECM, Information Security, Records Retention | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Comments Off on Data Classification — Proactive Gambit against Reactive Inertia

General Counsel Toolworks Forum: Data Governance & eDiscovery

Posted by Johnny Lee on December 1, 2011

Sponsored by Grant Thornton LLP’s Forensic & Litigation professionals, the Forum offers educational events and resources for today’s in-house counsel and corporate senior management. We collaborate with trial and transaction lawyers from some the nation’s leading law firms to bring you periodic complimentary webcasts addressing important financial, operational and legal issues that can impact your organization.

Each event will be supported by a customized Toolbox — documents and other resources offering guidance on the topics covered by the webcast.  The next Toolworks Forum will focus upon the state of the e-discovery marketplace; the importance of intelligent, proactive information and litigation management; and practical steps companies can take to reduce expenses and risks associated with civil litigation and government investigations.

This webinar event will be held on Thursday, January 19, 2012, and it will begin at 1:00pm Eastern time and continue for 90 minutes.  CLE credit has been applied for, and full details can be found here.  Johnny Lee, Director in Grant Thornton’s Forensic & Litigation practice, and Dante Stella, eDiscovery practice leader at Dykema Gossett, will present.

Posted in Computer Forensics, Data Governance, ECM, eDiscovery, Information Security, Investigations, Litigation Hold, Records Retention, Social Networking | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

Divorce Law ruling with potentially far-reaching eDiscovery implications…

Posted by Johnny Lee on November 10, 2011


A fascinating case from Connecticut may shake up the eDiscovery world.  About a month ago, Judge Kenneth Schluger ordered that soon-to-be-divorced couple Stephen and Courtney Gallion exchange the login information for their Facebook and dating websites.

Like many recent examples from the case law, the reasoning adopted by the court was that the content found within these accounts speaks directly to a matter before the bar.  Namely, Stephen Gallion is alleging that such content raises questions of parental fitness, something that speaks directly to the issue of custody in this divorce case, according to his divorce attorney Gary Traystman.

The reason this was elevated to the judge is that a prior agreement between the parties to share these account credentials broke down after evidence arose (according to Traystman) that Courtney Gallion had texted a friend, requesting that the recipient log into her accounts, delete some messages, and change some passwords.  The judge issued an injunction against such misbehavior, and he then ordered the parties’ attorneys to exchange passwords for such accounts held by both spouses as a furtherance to the discovery process.

Interestingly, this judicial order violates Facebook’s terms of service.  This raises questions of conflicting guidance, among others, though the parties are undoubtedly going to err on the side of listening to a judge.  As traditional notions of privacy continue to morph within the legal landscape, we will undoubtedly see more of these cases…so be careful what you put into your digital archiveno matter how private you believe it to be, it is both permanent and potentially discoverable.

Posted in Computer Forensics, eDiscovery, Fraud, Information Security, Investigations, Privacy, Records Retention, Social Networking | Tagged: , , , , , , , , , , , , , , , , , | Comments Off on Divorce Law ruling with potentially far-reaching eDiscovery implications…

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