Ride The Lightning

Hat tip to John Riley for sending me a press report about tU.S. District Judge Susan Illston, who recently ruled that national security letters (NSL) that come with a gag order on the recipient are unconstitutional because they impinge the First Amendment.

She also ordered the government to stop issuing NSLs and to cease enforcing the gag provisions in other cases. She did stay her ruling for 90 days to allow the government time to appeal. The FBI says it issued over 50,000 NSLs in the 2009-2011 time frame.

The article does a really good job of going through the history of NSLs, including the fact that these letters, which don't require court approval, have been abused in many cases - and that finding came from a Justice Department Inspector General audit. So long as the FBI asserts that the information is relevant, it simply self-issues NSLs.

Never been a fan, never thought there was adequate oversight - and hope that the Ninth Circuit Court of Appeals upholds this decision.

E-mail: snelson@senseient.com          Phone: 703-359-0700

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Last week, we had the pleasure of offering a kind of Legal Tech Boot Camp to law students at the University of New Hampshire. Professor and friend Bruce Dorner had kindly given us the invitation to speak to his students. This was the first time we had ever Skyped with a class of students and it was great.

Unlike the typical webinar, we could actually see the students and feel how engaged they were. There was much more of a connection with the students. It struck us afterwards that more law schools might want to think about pulling in guest lecturers who are specialists in law practice management (finance, marketing, management and technology), areas where students never seem to get enough in the way of practical skills.

So pass this along to the law school deans and professors you may know - I am sure the Law Practice Management Section of the ABA could provide expertise on any of these issues.

Best moment of the seminar: When I told the students that, if they kept Facebook open on their computers, the Facebook Terms of Service allows Facebook to follow their Internet activity. There was an immediate and amusing flurry of students exiting Facebook. :-)

E-mail: snelson@senseient.com          Phone: 703-359-0700

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It's not like we couldn't figure out that this was happening, but for the first time the Department of Defense (DoD) has acknowledged forming 13 teams of cyberwarriors whose mission is offense not defense.

Last week, National Security Agency Director Gen. Keith Alexander, also the chief of the new Cyber Command, advised Congress that he would be leading the effort to establish the teams. The Cyber Command was created to integrate cyberspace operations for the protection of DoD networks. The General told Congress, "This is an offensive team that the Defense Department would use to defend the nation if it were attacked in cyber space. Thirteen of the teams that we're creating are for that mission alone.”

We are engaged in cyberchess - and it makes sense, as it did during the Cold War, that we make sure our enemies know that we can destroy them if they seek to destroy us. Then it was bombs, now it is cyberattacks. I'm not sure that society has made much progress.

E-mail: snelson@senseient.com          Phone: 703-359-0700

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As the New York Times reported, President Obama's national security adviser became the first White House official to enter into verbal fisticuffs with the Chinese on Monday, asking China to stop the torrential theft of data from U.S. networks and to agree to "acceptable norms of behavior in cyberspace." Tom Donilon spelled out what the White House wants from China:

• Public recognition of the urgency of the problem;
• A commitment to cracking down on hackers in China; and
• An agreement to take part in a dialogue to establish global standards

So we've agreed to identify China by name - officially. That obviously comes on the heels of Mandiant's recent report linking one of the most active Chinese hacking groups to the People's Liberation Army, always something of a misnomer. There has also been a hue and cry in the corporate world which seems to finally realize how badly its data has been penetrated,

The Chinese have, naturally, pointed their finger at us, claiming that most of their own cyberattacks come from the U.S. There may be unclean hands all around, though I doubt the U.S. has been doing anything on the scale of the Chinese - and our motives may well be different, though I tend to find all government motives suspect.

While I'd like to be in good guys, it seems as though the harsh reality is that there are better and worse guys.

It is going to be tough to take a hard line with China when we need its help so much to tamp down the belligerence of North Korea. But as chess games go, it is an interesting first move.

E-mail: snelson@senseient.com          Phone: 703-359-0700

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Very clever (something I've rarely said about the French) short video advertisement explaining why we'll always have paper. I'll return to serious stuff tomorrow. Turn the volume up and enjoy.

Thanks Alan Goldberg!

E-mail: snelson@senseient.com          Phone: 703-359-0700

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Project Counsel had a very interesting post yesterday about a new Securities and Exchange Commission (SEC) quantitative analytics unit which will be monitoring the algorithmic trading strategies hedge funds and other trading firms now deploy regularly.

As the U.S. financial watchdog, the SEC has its work cut out for it in the face of big data and algorithmic trading strategies. The head of the new unit is Erozan Kurtas, who calls his team members Jedis. The unit was spawned as a result of the 2010 "flash crash" of U.S. stocks. The unit deals directly with trading firms, some of whom are none too happy to be sharing their proprietary formulas with government agents who might one day leave and join competing businesses where they could use what they know.

Regulators are finding that today's trading is developing at a furious pace that outstrips the knowledge of many of the market gatekeepers and raises the risk of manipulation. The Jedis are intended to bring high level knowledge to the fight against those who seek to manipulate markets for their own gain.

All I can say is that the Jedis better keep their light sabers fully charged. The Dark Force will offer a long-standing battle against the Empire's attempt to enforce its laws and regulations.

E-mail: snelson@senseient.com          Phone: 703-359-0700

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A recently released report issued by the Ponemon Institute reveals that 55 percent of U.S. small businesses have experienced at least one data breach, but only a third notified individuals that their personal information had been exposed. The companies which participated had annual revenues of less than $10 million.

The survey indicated that 53 percent had multiple breaches. That last statistic should raise eyebrows. And since 46 states have data breach notification laws, it is disturbing that a third of the respondents did not notify the people affected by the breach.

The primary causes of the data breaches were employee or contractor mistakes; lost or stolen laptops, smartphones, storage media; and procedural mistakes.

70 percent of the respondents believed that sensitive data is more likely to be breached when the data is outsourced - but 62 percent do not have contracts in place requiring third parties to cover the costs associated with a breach. It is troubling that 85% share customer and employee records with third parties such as those which provide billing, payroll, employee benefits, web hosting and information technology services but obviously are not taking adequate data security precautions.

E-mail: snelson@senseient.com          Phone: 703-359-0700

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Women have long been victims of webcam extortion. Typically, they are encouraged to strip or perform sexual acts and then the guy on the side of the webcam records the event and uses it to blackmail the woman.

Apparently, the tables have been turned in Singapore, where women are enticing men to strip and engage in sex acts, often doing the same themselves first to encourage the men. But the only motive of the women is to record and blackmail their male victims.

The Singapore police report a five-fold increase in such crimes. They've even issued a set of tips for men. What caught my attention was the simplicity of their advice to men: "Keep your clothes on."

Good advice for both goose and gander.

E-mail: snelson@senseient.com          Phone: 703-359-0700

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