NYDFS Uses New Powers to Investigate Alleged Price Spikes in COVID-19 Medicines, Targeting Non-Licensees

by

Continuing its focus on consumer protection enforcement, the New York State Department of Financial Services (“DFS”) announced an investigation into alleged price spikes for six drugs connected to treatments of COVID-19 medical conditions.[1]  According to DFS, its newly-formed Office of Pharmacy Benefits (“OPB”) commenced the investigations under Insurance Law § 111 into what it characterizes as “anomalously large spikes” in the prices of the six drugs, occurring since the onset of the COVID-19 pandemic.  These medications are Ascor, Budesonide, Dexonto, Mytesi, Duramorph and Chloroquine phosphate, each of which has some actual or claimed therapeutic use for COVID-19 conditions. More detail on this investigation can be found on my blog post for the NYU Program on Corporate Compliance and Enforcement, here:

New York State Department of Financial Services (“DFS”) Uses New Powers to Investigate Alleged Price Spikes in COVID-19 Medicines, Where Targeted Pharma Manufacturers Are Not DFS Licensees

 

NYDFS Issues Guidance Concerning Cybersecurity Threats to Nonpublic Information

by

 A key objective of NYDFS Regulation Part 500 is to permit the agency to share information it receives from its 72-hour notification provision with all regulated entities. This can help protect all entities from a cyber threat identified initially at some entities; NYDFS regulates over 3500 entities with approximately $7 trillion in assets. This recent … Read more

NYDFS Issues Findings Concerning Facebook Data Privacy Deficiencies

by

NYDFS issued a report last week concerning Facebook data privacy deficiencies, following a WSJ report that Facebook received sensitive user data from some popular apps, including a fertility-tracking app named “Flo,” for use in Facebook’s analytics tool.
– Facebook’s subsidiary, Facebook Payments Inc., is licensed as a money transmitter but the report found Facebook Payments “had no involvement in the privacy issues examined.” Since Facebook, the parent, indicated its willingness to cooperate “fully” the parties sought to avoid any clash about jurisdictional issues.
– NYDFS found that, while Facebook had taken steps to remediate, such as building a screening tool that would reject sensitive health information, it failed to “engage fully” with respect to other remediation proposals, and its effort to enforce its own policies against collection of sensitive data was “seriously lacking.”
– In January 2021, the Federal Trade Commission reached a proposed settlement with “Flo,” the fertility tracking app, requiring it to keep promises about user privacy.
– NYDFS argues this is another incident demonstrating the need for greater regulation on the federal and state level.

The NYDFS report can be found here: https://www.dfs.ny.gov/system/files/documents/2021/02/facebook_report_20210218.pdf

The proposed Consent Order and Complaint for the Flo Health matter can be found here: https://www.ftc.gov/enforcement/cases-proceedings/1923133/flo-health-inc

 

NYDFS Issues Its Second Cybersecurity Enforcement Action

by

NYDFS Cybersecurity Enforcement Action No. 2 — this time from a routine examination. Agency examiners identified significant non-compliance with the Cybersecurity Regulation by a mortgage banker, Residential Mortgage Services Inc.
– An employee handling sensitive customer information fell victim to a phishing scam in 2019
– The company failed to report the breach to NYDFS within 72 hours as required
– Indeed, it only reported it for the first time during an examination in mid-2020
– The company also failed to conduct a “comprehensive” cybersecurity risk assessment in 2019 as required
– Yet its CISO certified in April 2020 that the firm was in full compliance with the regulation
– The company will pay a $1.5 MM penalty and remediate
– Important: the penalty is assessed under the Banking Law for unsafe/unsound conduct — not the Financial Services Law.

Link to the Consent Order can be found here: https://www.dfs.ny.gov/system/files/documents/2021/03/ea20210303_residential_mortgage_0.pdf

NYDFS Issues Cybersecurity Alert to Regulated Entities

by

On March 9, 2021 NYDFS issued another cybersecurity alert to regulated entities. It disclosed that in recent days thousands of organizations were compromised via zero-day (newly discovered) vulnerabilities in the Microsoft Exchange Server. Microsoft made patches available for these vulnerabilities on March 2 but many organizations apparently were compromised before the patches were either available or applied. NYDFS is urging all regulated entities with vulnerable Microsoft Exchange services to act immediately by patching or disconnecting vulnerable servers. CISA has also released a current activity update outlining how to search for the type of compromise identified.

The alert may be found here: https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202103092

A View from the Inside: A Guide to CFPB Investigations

by

Part I of a two part article I co-authored with with Tony Alexis and Kyle Tayman of Goodwin, Procter & Hoar, LLP concerning how Federal agencies, including the CFPB, are expected to ramp up enforcement under the new administration. I am fortunate to have the opportunity to co-author this article  concerning navigation of CFPB investigations and how they relate to NYDFS investigations. Stay tuned for Part II of the article — NYDFS investigations, coming soon.

Part One of the two part series can be found here:  Alexis_Levine_Tayman_RBFS_Final — Part One

NYDFS Issues Fair Lending Report on Goldman Sachs Apple Card

by

A lengthy declination letter: What happens when a regulator conducts an investigation and finds no wrongdoing? For its fair lending inquiry of Goldman Sachs co-branded credit card, the Apple Card, NYDFS issued a report on March 23, 2021 that resembles a lengthy declination letter. The report makes clear after “exhaustive review of documentation and data” NYDFS failed to uncover “evidence of deliberate or disparate impact discrimination.” Other notes:
– The investigation commenced following a viral Tweet from a tech entrepreneur alleging his wife received less favorable terms under the Apple Card.
– Tweets and other social media are increasingly visible sources for investigations (worthy or not)
– NYDFS undertook a massive statistical analysis as part of its investigation, finding no wrongdoing
– Goldman Sachs offered strong cooperation and a consumer-oriented program to assist people with inadequate credit ratings to improve their credit, a program it called “Path to Apple Card”
– 70,000 consumers enrolled in “Path to Apple Card” and about 5,000 of them have been approved for an Apple Card
– The report contains valuable guidance on the agency’s current thinking on fair lending

The report is here: https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202103231

NYDFS Issues Cyber Fraud Alert

by

On March 30 2021 NYDFS issued a followup cybercrime alert: “This cybercrime campaign is a serious threat to the personal information of New Yorkers, and we urge all personal lines insurers and other financial services companies to take aggressive action to prevent the further loss of consumer information. All financial services companies should immediately check for any evidence of this cybercrime and ensure that they have implemented [] the robust access controls required by DFS’s cybersecurity regulation, 23 NYCRR 500.”

https://www.dfs.ny.gov/industry_guidance/industry_letters/il20210330_cyber_alert_followup

MATTHEW LEVINE JOINS “BANK TALK” PODCAST ON THE ANTI-MONEY LAUNDERING ACT OF 2020

by

Matthew Levine joined Trish Sullivan of Deutschebank and Chris Boehing of Paul Weiss Rifkind Wharton & Garrison to discuss the new anti-money laundering amendments to the Bank Secrecy Act for theis episode of the International Institute of Banker’s podcast “Bank Talk.”   The podcast can be found here: