Summary
The U.S. Court of Appeals for the Second Circuit recently affirmed the dismissal of a securities fraud class action against S&C client Barclays in Knapp v. Barclays PLC. S&C represented Barclays in the appeal. The court resolved two “issues of first impression” in the Second Circuit relating to issuer liability under the Securities Act. First, the court held that routine corporate events involving stock splits or reverse stock splits are not “sales” of securities that trigger liability under the Securities Act. Second, the court reinforced the Supreme Court’s 2023 decision in Slack Technologies, LLC v. Pirani, finding that the plaintiffs were required to trace their securities to the initial registration statement under which the pre-split securities were issued.
Background
In March 2022, Barclays Bank PLC (“Barclays”) announced it had inadvertently issued more than…
IT & DATA SECURITY (MITIGATING THE “INSIDER THREAT”)
As seen in the TD Bank case, an employee with too much “access” can sell your customer data to syndicates.
- Principle of Least Privilege (PoLP): Employees should only have access to the specific folders and databases required for their current task.
- Access Revocation: Have a “Termination Checklist” that ensures all digital access (Email, VPN, Banking) is revoked within 60 minutes of an employee resigning or being dismissed.
- System Logs & Audit Trails: Enable “Read/Write Logging” on your server. If a customer’s data is leaked, you need to know exactly which login accessed that record and at what time.
- Encryption at Rest: Ensure that sensitive files (like your customer ID numbers or payroll spreadsheets) are encrypted so that if a staff member copies them to a USB, they cannot be read.