Fenwick & West litigation partner Tyler Newby was quoted in a Daily Journal article regarding the possible securities law issues that top executives for 100+ healthcare, pharmaceutical and other companies, and their legal counsel, could face following security breaches that could affect financial markets.
The article discussed the circumstances in which hacked companies and firms might face securities law exposure, including private liability claims.
Newby told the Daily Journal that “this kind of ‘spear phishing’ tactic in the past has been used mostly in one-off situations,” and he expressed doubt that such claims against these companies’ executives could survive.
"I can't see any situation where an individual executive would be liable for being tricked this way because first you would have to show that there was a public disclosure of inside information and second you would need to show that the individual benefited from the disclosure," Newby said.
The most effective way for firms to deal with the threat of a security breach is to consult regularly with their IT managers, Newby advised. "This has come up from time to time in reports that the FBI has issued,” he added.
With regard to data security at law firms, Newby also noted that "At one point there appeared to be a concerted attempt to spear phish corporate law firms because firms knew the same kind of information [as companies] about M&A deals. And at firms, we are frequently reminded of the importance of security and are taught to stay vigilant about attempts to gain information about our clients."