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New Focus and Compliance Approach Needed for Privacy and Cybersecurity

By Margaret A. Dale, Michael R. Hackett, Kirsten E. Lapham, William Komaroff, Timothy W. Mungovan, Dorothy Murray, Joshua M. Newville, Todd J. Ohlms, Seetha Ramachandran, Ana Vermal, Samuel J. Waldon, Jonathan M. Weiss, Anthony M. Drenzek, Kelly McMullon, James Anderson, Alexandra V. Bargoot, William D. Dalsen, Adam L. Deming, David W. Heck, Hena M. Vora & Lucy C. Wolf on April 8, 2021
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In 2020, we saw an increased regulatory focus on cybersecurity. Though former SEC Chairman Clayton largely took the view that existing statutes and regulations were sufficient, the Division of Examinations increased exam activities in the space while agencies like FinCEN increased enforcement against violators. We can expect to see a continued focus on cybersecurity going forward, but it is unclear seen whether it will remain among the top priorities of the SEC. As set forth in Risk #1, we believe that the presumptive Chairman, Gary Gensler, will take a more active approach generally and, as part of that, we expect a heightened focus on cybersecurity. Sponsors are a theoretically high value target for attack because even relatively small sponsors often control billions of dollars (whether directly or indirectly) and have highly confidential information concerning their investors and partners. It is important that sponsors’ commitment to, and investment in, cybersecurity systems, policies, and procedures is commensurate with their risks and profile in fact. State voters have also increased their focus on cybersecurity and privacy. The California Consumer Privacy Act of 2018 (“CCPA”) became operative on January 1, 2020, requiring qualifying businesses to enable consumers to know about and control the information collected about them. In November 2020, California voters passed the California Privacy Rights Act of 2020 (“CPRA”) in an effort both to expand and strengthen the scope of the CCPA.  (The CPRA will become operative on January 1, 2023.) Because both the CCPA and CPRA define consumers and businesses broadly, private investment funds and their sponsors and managers may be considered “qualifying businesses” and information they collect and use about their employees, job applicants, investors, and prospective investors (including KYC information) residing in California could be subject to either or both of the acts.

Overseas, now that the UK has left the EU, funds that operate in London and across the EU bloc must use a suitable route for the transfer of personal data. Thankfully, on February 19, 2021, the European Commission published a draft decision that the UK has an adequate level of protection for personal data (the UK has already made the reciprocal determination and has adopted the EU’s General Data Protection Regulation (GDPR) into national law). The next step is for the draft adequacy decision to be approved by the Member States.

Funds with data flows the EU/UK and between the US lost the protection of the EU-US Privacy Shield in mid-2020 so they will need to use one of the appropriate safeguards to transfer personal data – e.g., standard contractual clauses (SCCs) (for intragroup or third party transfers) or binding corporate rules (for intragroup transfers) – or else rely upon one of the applicable derogations. Funds must also have “appropriate supplementary measures” in place so that personal data transferred outside of the EU/UK is protected in any third country to the same extent as it would be under the GDPR.

Areas to watch in 2021 include possible divergence between interpretation of UK-GDPR and EU-GDPR, updates to SCCs that may require funds to replace existing clauses, and further guidance on appropriate supplementary measures.

Read more of our Top Ten Regulatory and Litigation Risks for Private Funds in 2021.

Photo of Margaret A. Dale Margaret A. Dale

Margaret Dale is a versatile first-chair litigator who handles different types of complex business disputes for a wide variety of clients across many industries.

While her practice is diverse, she regularly handles privacy and data security matters, including regulatory investigations and class action…

Margaret Dale is a versatile first-chair litigator who handles different types of complex business disputes for a wide variety of clients across many industries.

While her practice is diverse, she regularly handles privacy and data security matters, including regulatory investigations and class action lawsuits stemming from data breaches. She also focuses on intellectual property, where she represents individual artists and arts-related organizations and museums. With respect to securities and corporate governance, Margaret handles SEC enforcement proceedings, shareholder and partnership disputes, stock option, warrant and preferred stock matters, escrow fights and Delaware 220 actions, as well as regulatory and internal investigations.

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Photo of Michael R. Hackett Michael R. Hackett

Michael R. Hackett is a partner in the Litigation Department and a member of the Asset Management Litigation practice. Mike is an experienced litigator and trial lawyer focused on sophisticated business disputes.

A significant portion of Mike’s practice concerns disputes and regulation involving…

Michael R. Hackett is a partner in the Litigation Department and a member of the Asset Management Litigation practice. Mike is an experienced litigator and trial lawyer focused on sophisticated business disputes.

A significant portion of Mike’s practice concerns disputes and regulation involving private funds, including private equity, venture capital, hedge, real estate and private credit funds, as well as other limited partnerships, where he regularly advises funds, fund sponsors, investment advisers and institutional and individual investors.

Mike’s experience representing private fund clients runs the gamut, from control contests within advisers, to disputes between limited partners and general partners, to representation of investment advisers in connection with regulatory examinations, investigations and enforcement matters. Mike also routinely represents fund sponsors and their portfolio companies, including in significant post-closing disputes.

In addition to his private funds practice, Mike represents public and private companies in a variety of complex commercial and securities litigation matters, including in the areas of corporate governance, fiduciary obligations, capital markets, financial services, and bankruptcy and insolvency.

Mike has been named a “Rising Star” by Massachusetts Super Lawyers, and was identified as an “associate to watch” by Chambers USA in 2017 and 2018.

During law school, Mike served as an intern judicial clerk to the Honorable William G. Young of the United States District Court for the District of Massachusetts.

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Photo of Kirsten E. Lapham Kirsten E. Lapham

Kirsten Lapham is a partner specialising in financial services regulation. She advises a broad range of both institutional and individual clients on a variety of financial services regulatory and compliance issues. Her practice has a specific emphasis on the regulatory issues arising under…

Kirsten Lapham is a partner specialising in financial services regulation. She advises a broad range of both institutional and individual clients on a variety of financial services regulatory and compliance issues. Her practice has a specific emphasis on the regulatory issues arising under the AIFMD, and MiFID II for a range of EU and indirectly impacted firms outside of the EU.

Experience in this area includes advising multiple clients on the EU marketing and registration regimes and overlaying local regulatory considerations, such as the U.K. retail distribution review and Financial Promotion regime. Kirsten has also worked on MIFID II implementation projects and provided ongoing support for well-known asset managers and advised multiple clients on re-papering arrangements under the Directive. Kirsten also routinely advises on the regulatory issues that impact M&A transactions. She has represented some of the largest and most well-known alternative investment managers, including: TPG; PIMCO; Citi Private Bank; Dragoneer Investment Group; and a number of US and UK boutiques among many others.

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Photo of William Komaroff William Komaroff

Bill Komaroff is a partner in the Litigation Department and White Collar Practice Group. He has a nationwide federal practice focused on corporate defense and investigations, counseling and defending institutional and individual clients in connection with a broad array of complex government investigations…

Bill Komaroff is a partner in the Litigation Department and White Collar Practice Group. He has a nationwide federal practice focused on corporate defense and investigations, counseling and defending institutional and individual clients in connection with a broad array of complex government investigations, prosecutions and civil disputes.

Bill also has served as a member of the Criminal Justice Act Panel for the District Court for the Southern District of New York.

From 2003 to 2007, Bill served as an Assistant U.S. Attorney for the Southern District of New York and prosecuted tax fraud, money laundering, bank fraud, mail fraud and wire fraud cases, among others. He tried numerous cases to successful jury verdicts and argued cases before the Second Circuit Court of Appeals.

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Photo of Timothy W. Mungovan Timothy W. Mungovan

Tim Mungovan serves as chair of the Firm’s Litigation Department, co-head of Proskauer’s Commercial Litigation Practice Group and co-head of the Asset Management Litigation team. His practice is focused on solving complex business disputes in a variety of areas including securities, investment management…

Tim Mungovan serves as chair of the Firm’s Litigation Department, co-head of Proskauer’s Commercial Litigation Practice Group and co-head of the Asset Management Litigation team. His practice is focused on solving complex business disputes in a variety of areas including securities, investment management, corporate governance, fiduciary obligations, capital markets, financial services, bankruptcy and insolvency. A significant portion of Tim’s practice involves disputes and risk management for private investment funds (private equity, venture capital and hedge funds) and private credit vehicles.

Recently, Tim has been heavily involved in: representing the Financial Oversight and Management Board for Puerto Rico in litigation involving the restructuring of Puerto Rico’s finances; SEC investigations of advisers to private equity funds and venture funds; control contests within advisers to private equity and venture capital funds; debt restructuring disputes on behalf of private credit funds and business development companies (BDCs); and litigation on behalf of two publicly-listed biotech companies against a hedge fund manager and a venture fund manager, respectively.

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Photo of Dorothy Murray Dorothy Murray

Dorothy Murray is a partner in the Litigation Department specializing in investment and commercial dispute resolution. She supports clients across a wide range of sectors, including financial services, asset management/private equity, energy, telecoms, and maritime.

Dorothy represents clients in disputes arising from all…

Dorothy Murray is a partner in the Litigation Department specializing in investment and commercial dispute resolution. She supports clients across a wide range of sectors, including financial services, asset management/private equity, energy, telecoms, and maritime.

Dorothy represents clients in disputes arising from all aspects of their business, whether those disputes are post M&A, shareholder, employment, contractual, partnership or JV related.

Dorothy has experience managing litigation in common and civil law jurisdictions, and in commercial and investor state arbitration.  She is fluent with all the key divisions of the English High Courts and major arbitral institutional rules, including LCIA, ICC, LMAA, SCC, ISCID and UNICTRAL.  One of her particular interests is in the enforcement of arbitral awards.

In addition to representation in contentious matters, she uses her disputes experience to support clients at the transaction and pre‑action stages, working with companies and funds to identify, understand and mitigate personal and corporate liabilities and risks.

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Photo of Joshua M. Newville Joshua M. Newville

Joshua M. Newville is a partner in the Litigation Department in New York and a member of Proskauer’s White Collar Defense & Investigations Group and the Asset Management Litigation team.

Josh handles securities litigation, enforcement and regulatory matters, representing corporations and senior executives…

Joshua M. Newville is a partner in the Litigation Department in New York and a member of Proskauer’s White Collar Defense & Investigations Group and the Asset Management Litigation team.

Josh handles securities litigation, enforcement and regulatory matters, representing corporations and senior executives in civil and criminal investigations. In addition, Josh advises registered investment advisers and private fund managers on regulatory compliance, SEC exams and related risks.

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Photo of Todd J. Ohlms Todd J. Ohlms

Todd J. Ohlms is as a partner in the Litigation department and a member of the Asset Management Litigation Group. Todd has represented clients in business-critical litigation matters for over 25 years, and has tried several cases to verdict before juries and the…

Todd J. Ohlms is as a partner in the Litigation department and a member of the Asset Management Litigation Group. Todd has represented clients in business-critical litigation matters for over 25 years, and has tried several cases to verdict before juries and the bench. He has also participated in numerous arbitration proceedings, including counseling clients regarding disputes subject to international arbitration agreements.

Todd is often retained by private equity firms to counsel them and their portfolio companies on a wide range of matters and is frequently chosen to serve as outside general counsel to their portfolio companies. He also represents family offices in disputes related to their operating companies where sensitive and complex relationships often play as large a role in determining the result as the actual legal theories at issue.

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Photo of Seetha Ramachandran Seetha Ramachandran

Seetha Ramachandran is a partner in the Litigation Department.

She is a leading expert in anti-money laundering (AML), Bank Secrecy Act, economic sanctions and asset forfeiture matters. She represents banks, broker dealers, hedge funds, private equity funds, online payment companies, and individual executives…

Seetha Ramachandran is a partner in the Litigation Department.

She is a leading expert in anti-money laundering (AML), Bank Secrecy Act, economic sanctions and asset forfeiture matters. She represents banks, broker dealers, hedge funds, private equity funds, online payment companies, and individual executives and officers, in high stakes and sensitive matters. Her practice focuses on white collar and regulatory enforcement defense, internal investigations, and compliance counseling. In addition to her subject matter expertise, Seetha is an experienced trial and appellate lawyer, having conducted 10 criminal jury trials, argued 10 appeals before the U.S. Court of Appeals for the Second Circuit, and handled ancillary civil proceedings in forfeiture cases.

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Photo of Ana Vermal Ana Vermal

Ana Vermal is a quadrilingual common law and civil law litigator specializing in international arbitration.

She represents corporations from around the world in complex arbitrations arising out of their cross-border business transactions such as acquisitions, joint ventures, distribution and licensing agreements.  Ana handles…

Ana Vermal is a quadrilingual common law and civil law litigator specializing in international arbitration.

She represents corporations from around the world in complex arbitrations arising out of their cross-border business transactions such as acquisitions, joint ventures, distribution and licensing agreements.  Ana handles arbitral proceedings under the rules of all major arbitral institutions.  Ana is also regularly appointed to serve as arbitrator.

In addition, Ana represents clients before courts in France and the United States, particularly in connection with the enforcement of awards.

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Photo of Samuel J. Waldon Samuel J. Waldon

Sam Waldon is a partner in the Litigation Department and a member of the Securities Litigation, White Collar Defense & Investigations and Asset Management Litigation Groups.

Sam’s practice focuses on securities litigation, enforcement and regulatory matters. He represents corporations and financial institutions, and …

Sam Waldon is a partner in the Litigation Department and a member of the Securities Litigation, White Collar Defense & Investigations and Asset Management Litigation Groups.

Sam’s practice focuses on securities litigation, enforcement and regulatory matters. He represents corporations and financial institutions, and their officers, directors and employees, in investigations, exams, internal investigations and litigation. Sam has in-depth experience in a broad range of Securities and Exchange Commission (SEC) enforcement matters, including financial disclosure, accounting, investment adviser, asset management, private equity, broker dealer, FCPA, cyber-related misconduct, insider trading and market abuse.

Before joining Proskauer, Sam served as Assistant Chief Counsel in the SEC’s Division of Enforcement for eight years. In that role, Sam helped develop and implement many of the Division’s policies and procedures, and advised the Division’s senior leadership, investigative staff and trial unit attorneys on a wide range of legal and policy issues. He regularly provided guidance on the terms of negotiated settlements and charging decisions in litigated matters. Sam also worked closely with staff in other Divisions and Offices throughout the SEC on enforcement related issues, including playing a key role in the drafting of the rules establishing the SEC’s whistleblower program.

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Photo of Jonathan M. Weiss Jonathan M. Weiss

Jonathan Weiss is a partner in the Litigation Department. Jonathan represents both plaintiffs and defendants in a wide range of high-stakes litigation, including antitrust, class action, financial services, securities and other complex commercial litigation. Jonathan has won multiple noteworthy jury verdicts, including the…

Jonathan Weiss is a partner in the Litigation Department. Jonathan represents both plaintiffs and defendants in a wide range of high-stakes litigation, including antitrust, class action, financial services, securities and other complex commercial litigation. Jonathan has won multiple noteworthy jury verdicts, including the fourth largest jury award in the history of the State of Arizona (over $110 million), and has significant appellate experience briefing and arguing appeals in both state and federal courts across the nation.

Jonathan has been recognized as a “Rising Star” by Southern California Super Lawyers every year since 2011, and was recognized by Legal 500 U.S. in their 2015 leading lawyers in appellate litigation edition, noting his “incredibly dedicated” advocacy on behalf of his clients. Jonathan has also spent considerable time on pro bono matters, for which he has been honored by Public Counsel among other organizations.

In addition to his busy practice, Jonathan has taught courses on Ninth Circuit appellate advocacy throughout Southern California and has lectured at several universities nationally, including Harvard Law School, UCLA Law School, the University of Illinois and the University of Pittsburgh. Jonathan is also a member of the Pacific Council on International Policy.

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Photo of Anthony M. Drenzek Anthony M. Drenzek

Tony is special regulatory counsel in the Corporate Department and a member of the Private Investment Funds Group and the Private Equity & Hedge Fund Litigation team. His practice focuses on advising U.S. and offshore private fund managers on all aspects of federal…

Tony is special regulatory counsel in the Corporate Department and a member of the Private Investment Funds Group and the Private Equity & Hedge Fund Litigation team. His practice focuses on advising U.S. and offshore private fund managers on all aspects of federal, state and SRO organizational and operational compliance, with a specific emphasis on the Investment Advisers Act of 1940.

Tony assists U.S. and offshore private fund clients in registering with the SEC as investment advisers, or reporting as exempt reporting advisers, and complying with CFTC and various U.S. state registration and notice-filing requirements. He also assists on structuring fundraising transactions to comply with the U.S. offering exemptions available under Regulation D and Regulation S.

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Photo of Kelly McMullon Kelly McMullon

Kelly McMullon is an associate in the Labor & Employment Law Department and member of the International Labor & Employment Group.

Kelly assists clients in a wide range of contentious and non-contentious labor and employment law matters including claims for unfair dismissal, discrimination…

Kelly McMullon is an associate in the Labor & Employment Law Department and member of the International Labor & Employment Group.

Kelly assists clients in a wide range of contentious and non-contentious labor and employment law matters including claims for unfair dismissal, discrimination and whistleblowing in a variety of sectors such as financial services, retail and information technology.

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Photo of James Anderson James Anderson

James Anderson is an associate in the Litigation Department and a member of the Patent Law and Intellectual Property groups. He is registered to practice before the United States Patent and Trademark Office.

Jim assists clients with a broad range of intellectual property…

James Anderson is an associate in the Litigation Department and a member of the Patent Law and Intellectual Property groups. He is registered to practice before the United States Patent and Trademark Office.

Jim assists clients with a broad range of intellectual property matters spanning various technologies, including electromechanical devices, communications systems, semiconductor devices, and machining and fabrication equipment. He has experience in many phases of practice before the United States Patent and Trademark Office, from the preparation and prosecution of patent filings to drafting responsive submissions for clients involved in post-grant proceedings before the Patent Trial and Appeal Board. Jim’s litigation experience, touching on patent, antitrust, and other complex commercial litigation matters, spans pre-suit investigation, discovery, motion practice, and trial preparation in state and federal court as well as the International Trade Commission.

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Photo of Alexandra V. Bargoot Alexandra V. Bargoot

Alexandra Bargoot is an associate in the Litigation Department and a member of the Private Equity & Hedge Fund Litigation Group. Her practice includes a variety of complex commercial litigation matters, with a focus on private investments funds, involving both private disputes and…

Alexandra Bargoot is an associate in the Litigation Department and a member of the Private Equity & Hedge Fund Litigation Group. Her practice includes a variety of complex commercial litigation matters, with a focus on private investments funds, involving both private disputes and regulatory issues.

Alexandra assists clients on matters involving SEC investigations, pay to play violations, private actions, sales of investments, investigations of aiding and abetting, arbitration award enforcement, among other areas of expertise.

During her time at Cornell Law School, Alexandra served as senior online notes editor for the Cornell International Law Journal. She also clerked for Judge Frederick Brown of the Massachusetts Appeals Court in the summer of 2014.

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Photo of William D. Dalsen William D. Dalsen

Will Dalsen is an associate in the Litigation Department, practicing in the Patent Law, Intellectual Property, and Asset Management Litigation Groups.

Will practices in the area of complex intellectual property disputes, with a primary focus on patent infringement matters. He has litigated several…

Will Dalsen is an associate in the Litigation Department, practicing in the Patent Law, Intellectual Property, and Asset Management Litigation Groups.

Will practices in the area of complex intellectual property disputes, with a primary focus on patent infringement matters. He has litigated several high-profile patent infringement cases for some of the world’s leading technology companies, including Panasonic, Philips, Sony, Mitsubishi and Zenith Electronics.

His practice also includes complex commercial and securities litigation matters, in particular those involving private equity, venture capital and hedge funds. He has represented public and private corporations in contractual disputes, business tort cases, and government investigations. In addition, he advises funds, fund sponsors, investment advisers, and institutional and individual investors.

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Photo of Adam L. Deming Adam L. Deming

Adam Deming is an associate in the Litigation Department.

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Photo of David W. Heck David W. Heck

David Heck is a commercial litigator with an emphasis on intellectual property and antitrust matters. He has experience across all phases of the legal process, from advisory matters to trial, and has represented clients from various industries, including consumer product manufacturers, private equity…

David Heck is a commercial litigator with an emphasis on intellectual property and antitrust matters. He has experience across all phases of the legal process, from advisory matters to trial, and has represented clients from various industries, including consumer product manufacturers, private equity firms, medical supply companies, and sports and entertainment entities. In particular, David has handled false advertising cases for both plaintiffs and defendants; trademark infringement claims; antitrust prosecutions and class actions; breach of contract claims; employment disputes; and securities litigations and investigations.

David also maintains an active pro bono practice and has been awarded Proskauer’s Golden Gavel award for excellence in pro bono work. He frequently represents military veterans in matters with the Department of Veterans Affairs and has served clients in a broad range of immigration matters.

Prior to law school, David worked as an editorial producer for MLB Advanced Media.

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Photo of Hena M. Vora Hena M. Vora

Hena Vora earned her J.D. from Emory University School of Law, where she received the Pro Bono Publico honor and a Transactional Law Certificate. In addition, she was a national competitor on the Moot Court Society and served as president of Emory’s South…

Hena Vora earned her J.D. from Emory University School of Law, where she received the Pro Bono Publico honor and a Transactional Law Certificate. In addition, she was a national competitor on the Moot Court Society and served as president of Emory’s South Asian Law Students Association. While at Emory, she served as judicial intern for Judge Denny Chin at the U.S. Court of Appeals for the Second Circuit, legal extern for General Electric and securities research assistant to Professor George Georgiev.

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Photo of Lucy C. Wolf Lucy C. Wolf

Lucy Wolf is an associate in the Litigation Department and a member of the Private Funds Group.

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  • Posted in:
    Financial
  • Blog:
    The Capital Commitment
  • Organization:
    Proskauer Rose LLP
  • Article: View Original Source

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