Bug Bounties and Ransomware Demands: Storm Clouds Ahead for In-House Counsel

Michael Ward, Matthew Baker, and Jessica Wu of Baker Botts write about the conviction of Uber’s former security chief for felony violations of obstructing a Federal Trade Commission investigation and “misprision of felony” for failing to disclose a 2016 data breach. They then discuss issues for in-house counsel that the case raises, beginning with:

Action Items for In-House Counsel

A duty to disclose? This case compels a reexamination of the perception that there is no general duty to disclose a crime. Certainly, in the case of data breaches, the obligation to disclose may well be clearly defined by statute. Further, any company that is under active investigation for a data breach should carefully consider its obligation to disclose additional security incidents to regulators, particularly if the company has not yet certified substantial compliance with a subpoena or civil investigative demand. But even apart from those circumstances, in-house counsel should also consider whether the company has made any factual representations in litigation, investigations, or compliance certifications that have now become false or misleading because of evolving events.

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