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Disclosing Information Security Breaches Under Privacy and Securities Laws
[Editor's Note: This is the second in a series of articles addressing some of the key issues surrounding corporate responsibility with respect to the privacy of information and security breaches.]
The Privacy Rights Clearinghouse estimates that over 100 million records containing sensitive personal information have been involved in security breaches. This non-profit consumer organization has tracked these breaches on its website (www.privacyrights.org) beginning with the significant and well-publicized ChoicePoint breach in February 2005. As a result, over two-thirds of states enacted security breach notification laws governing the notification that a company must make in the event of a security breach. This article outlines the requirements for providing notification of a security breach under state security breach notification law by any company and the factors that a public company needs to take into account regarding whether to disclose a security breach under federal securities law.
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