Encrypted? So What, Says Tennessee

In a first for the country’s growing body of state breach notification laws, Tennessee has recently amended its law to require notification even if the information subject to a breach was encrypted, and regardless of whether the encryption key itself was compromised.

Until now, other states have taken the position that encryption offered a “safe harbor” of sorts, under the logic that encrypted data is generally unreadable without adequate time and computing power to break the encryption.

Governor Bill Haslam enacted S.B. 2005 on March 24, 2016, amending Tennessee’s data breach statute to:

  1. remove the encryption caveat,
  2. specify a deadline for disclosing the breach as 45 days following discovery of the breach (subject to certain exceptions), and
  3. expanding the definition of “unauthorized person” to include “an employee of the information holder who is discovered by the information holder to have obtained personal information and intentionally used it for an unlawful purpose.”

The amended data breach provisions become effective July 1, 2016.

The prevalence of cybersecurity breaches is causing many states to revisit their data breach notification statutes to protect their residents. Stay tuned for the first state to require breach notification as soon as someone thinks about breaching your data.

Related Content

Latest Content

When Policies, Procedures and Testing Protocols Aren’t Enough…

The Compliance Program Rule continues to be a powerful tool for SEC enforcement, recently used by the SEC to address trading away in wrap accounts, misappropriation of retail client assets, and the misuse of an omnibus account. Advisory firms had written policies and procedures and testing protocols, but they were not good enough; are yours? … Continued

The Compliance Professionals Guide to Effective Trade Desk Monitoring

Global regulators continue to enhance their ability to monitor the activities of market participants through a combination of new rules, filing requirements, and upgrades to surveillance technologies. As a result, many market participants, including both buy-and sell-side firms, need to re-assess how they currently monitor the trading desk, and whether new policies and procedures are … Continued

How Do You Supervise for SEC Pay-to-Play Violations?

If you wanted more information about the contours of the SEC’s Pay-to-Play Rule, or how the SEC may enforce it, three recent Settlement Orders against large investment advisers for “over de minimis” political contributions provide some insight regarding one of the prohibitions: Contributions by Covered Associates to certain Government Officials over the specified Exception amount (capitalized words are terms in the … Continued

Do your Fund Documents Clearly Disclose Receipt of Accelerated Monitoring Fees?

Somewhat more reminiscent of the broken-windows enforcement era, two affiliated private equity advisers managing billions settled with the SEC on charges that they failed to make pre-commitment disclosures in fund governing documents related to accelerated fees received from portfolio companies. Interestingly, according to the Settlement Order, the advisers had made some disclosures in fund documents … Continued

With New Risk Alert, SEC Doubles Down on Best Execution

On July 11, 2018, the SEC issued a Risk Alert outlining commonly found compliance issues related to best execution by investment advisers. Advisers have an obligation to seek best execution of client transactions, taking into consideration quantitative factors such as execution quality and commission rate, as well as more qualitative factors such as the value … Continued

Mailing List

Subscribe to the Ascendant Compliance email list for the latest compliance resources, conferences, ComplianceCasts™, and more.

Loading form...

Contact Us

Ascendant works together with clients to identify and assess critical needs through customized plans. If you need assistance with compliance functions, regulatory services, cybersecurity or technology tools, we’d love to speak with you.