Application of the Law
Computer Fraud and Abuse Act (CFAA) and Electronic Communications Privacy Act (ECPA):
Due to its prohibition on unauthorized access to computer systems, the CFAA is relevant to the alleged illegal action in the case study. It might be against the CFAA if TechFite personnel acquired unlawful access to the networks or systems of other businesses to gather data. Since it deals with electronic communication eavesdropping, the ECPA is pertinent (Goslin, 2019). TechFite may have violated the ECPA if it intercepted or accessed other companies’ communications without the required authority.
Laws, Regulations, or Legal Cases:
Three statutes, rules, or court decisions may be relevant to bolster a negligence claim. These include contracts, privacy legislation, and data protection guidelines. For instance, TechFite might have violated NDAs and other agreements by improperly managing its clients’ private information (Škiljić, 2020). Should sensitive data not have been sufficiently protected, privacy laws and data protection regulations might have been broken, and general legal principles might have applied to carelessness in putting cybersecurity measures in place.
Duty of Due Care:
The case study contains two instances where the duty of reasonable care is lacking. Internal control needed to be improved initially, despite discussions about closely examining user accounts, putting data loss protection into practice, and monitoring internal network activities (Kosseff, 2019). Second, it is evident that more care was needed to protect sensitive data as there is a lack of IT segmentation and job separation, which gives employees unrestricted access and administrative authority.
Sarbanes-Oxley Act (SOX):
The case study is subject to SOX since TechFite is a publicly traded company on NASDAQ. The business must establish and maintain sufficient internal controls and financial reporting processes by SOX (Goslin, 2019). Incompetence in managing sensitive financial client data may lead to noncompliance with SOX regulations.
Legal Theories
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Evidence of Criminal Activity:
The case study’s findings point to possible industrial espionage and illegal network access at TechFite, among other suspected criminal activities (“Text of the Computer Fraud and Abuse Act,” 2017). The victims are other businesses whose confidential data was obtained without permission; the actors are TechFite personnel, especially those in the Business Intelligence (BI) Unit. Because internal oversight, user account auditing, data loss prevention, and network traffic monitoring were not sufficiently addressed by the current cybersecurity policies and procedures, workers could participate in unauthorized actions that prevented criminal conduct from occurring.
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Evidence of Negligence:
The case study offers proof of TechFite’s irresponsibility on several occasions. Employees of TechFite, especially those in the BI Unit, are the actors engaged in negligence, while the clients whose private data was mishandled are the victims (Aguirre, 2019). Due to improper IT segmentation, a lack of separation of roles, and a failure to uphold the principles of least privilege, negligence should have been avoided.
Legal Compliance Summary
TechFite is confronted with severe legal compliance issues due to accusations of illegal activity in its Applications Division (Škiljić, 2020). Due to concerns about unauthorized access and electronic communication eavesdropping, these claims may lead to possible violations of the Computer Fraud and Abuse Act (CFAA) and the Electronic Communications Privacy Act (ECPA). Additionally, there is strong evidence of carelessness in protecting confidential and proprietary data, which shows itself as a lack of diligence, especially in internal control and IT security procedures.
Another issue is the company’s noncompliance with the Sarbanes-Oxley Act (SOX), which results from insufficient internal controls for financial reporting (Škiljić, 2020). Because TechFite is a publicly traded company, strict SOX compliance is necessary. The integrity of its financial reporting could be compromised by carelessness in protecting client data. To put it briefly, TechFite is confronted with legal compliance issues arising from possible violations of the CFAA and ECPA, carelessness about information security, and noncompliance with SOX. Corrective action must be taken immediately to avoid legal ramifications, protect the company’s brand, and stay competitive (Škiljić, 2020). This overview is meant to emphasize to high management how urgent it is to deal with these critical compliance issues.
References
Goslin, I. (2019). Cyber extortion is threatening Industry 4.0. Network Security, 2019(5), 20–20. https://doi.org/10.1016/s1353-4858(19)30063-7
Kosseff, J. (2019). Cybersecurity law. https://doi.org/10.1002/9781119517436
Text of the Computer Fraud and Abuse Act. (2017). Cybersecurity Law, 425-432. https://doi.org/10.1002/9781119231899.app4
Aguirre, K. (2019). Willfulness in a Post-Robare World: Evidence of Subjective Intent, Not Negligence Conduct, is Needed to Show Willful Violations of Securities Laws. Fordham J. Corp. & Fin. L., 25, 501.
Škiljić, A. (2020). Cybersecurity and remote working: Croatia’s (non-)response to increased cyber threats. International Cybersecurity Law Review, 1(1-2), pp. 51-61. https://doi.org/10.1365/s43439-020-00014-3
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