Contractors. Passwords. Paid subscriber. Data.


Data Protection.

Data Protection.

You have access to a database of information that you have paid for, or even a database that belongs to your employer or a client you work for. The owners of the data supply you with a password to access the database. What happens if you give another person or company the password and they access the data, perhaps they even use the data to commit fraud for their own financial benefit?

What are the possible legal ramifications of such a scenario?

This past May a federal jury in Palm Beach County, Florida ruled on such a case involving contractors, paid subscribers and passwords.

The plaintiff, eVestment Alliance, LLC, a company that provides a variety of cloud-based solutions and data to the investment community, filed a lawsuit against a contractor it had hired, Compass iTech LLC.  As part of its contract, the contractor was given upload-only login credentials to perform tasks on the extensive database.

The suit claimed the defendant used a password it obtained from a “paid subscriber” to their services, and even hired a third party to download the data, which was then used to market and sell its own services. According to the lawsuit, this went on from 2011 through 2014.

When eVestment discovered what was going on, they immediately terminated the contractor’s login credentials. Oddly enough, Compass, the contractor brought a lawsuit against eVestment before the Federal District Court for the Southern District of Florida for tortious interference and defamation. The suit alleged that eVestment defamed them via derogatory correspondence with their clients.

Federal Computer Fraud and Abuse Act.

It was at this point that eVestment took their own legal action and filed a counterclaim alleging misappropriation of trade secrets, breach of contract and violation of the Federal Computer Fraud and Abuse Act (CFAA).

During the first stage of the lawsuit, a District Court Judge entered a summary judgement in favor of eVestment. The court ruled the actions they took against Compass were lawful and the defamation claim was unfounded.

Then in May of 2017 a jury heard the counterclaim filed by eVestment. Their deliberations found that Compass acted willfully and maliciously and with an intent to defraud, awarding eVestment $3.7 million, which included $2.5 million in compensatory damages and $1.2 million in punitive damages.

The paid subscriber from whom the password was obtained was not included in either of the lawsuits.

A 2016 ruling from the Ninth Circuit U.S. Court of Appeals (USA v. Nosal II) caused much controversy and confusion when it comes to sharing of passwords.

The case centered on David Nosal, who worked as a headhunter for executive search firm Korn-Ferry. After leaving Korn-Ferry and starting his own company, he accessed his former employer’s database using the password of a former co-worker who was still employed by Korn-Ferry. The Ninth Circuit upheld lower court rulings that Mr. Nosal was in violation of the CFAA.

Critics of the ruling, including the dissenting judge in the case, say the ruling makes it easier for employers to prosecute both current and former employees for unauthorized use of passwords, but warn that it now makes consumer password sharing a criminal offense under the Federal Computer Fraud and Abuse Act. Numerous articles in the media appeared after the ruling asking, “is sharing your Netflix password now a federal crime?” Calls for congress to amend the CFAA also grew louder, saying the current legislation, which was enacted in 1986, is too ambiguous in the age of the internet.

FHA Loan. Mortgage. Mortgage Rates.


FHA Loan. Mortgage Rates.

FHA Loans. Mortgage Rates

FHA Loans. Mortgage Rates

Okay, am I crazy, or what? I have started seeing advertisements for low qualifying mortgages—again!  The FHA loan that just about anybody can qualify for low mortgage rates. Is this a joke? Isn’t this what got folks into trouble before—buying into the quick fix, it’s-too-good-to-be-true scam, the low mortgage rates, without much accountability? I know everyone wants the American dream— the house with a picket fence, the nice car, the kids, and a cat and a dog. What ever happened to waiting until you can actually afford those things?


Last week the Money Section of The Guardian ran a story titled “Pundits are trying to bring the subprime mortgage back. Don’t let them.” The author of the article believes that it is extremely risky to return to the same lending practices that got us into so much trouble just a few short years ago. It states, in part, “The financial industry has plenty of reasons to offer the same high-risk, high-return loans that made so many bankers rich during the housing bubble before everything crashed. But it’s less clear why any sensible commentator wants to cheer the industry on.” Beware of the quick-fix FHA Loan inducing you to succumb to the low or no qualifying mortgage rates.

See article here:

FHA Loans. Mortgage rates.

Others believe that low qualifying (subprime) FHA loans can help the economy and the housing industry in particular. I happen to disagree. I have the view that we should learn from experience and not repeat the same mistakes we made before.
Someone, who was offended by my views asked me today, “So Francine, are you saying only rich folks should buy a house and have kids?” And my answer is a definitive, “No way!” However, I will say that if you cannot afford to have children or you cannot afford to buy that house you want, or you cannot afford the exact car you want today, then wait.

Contrary to popular belief, deferred gratification is not a bad thing. But we live in a materialistic society that seems to demand instant gratification. Instead of patience being a virtue, patience has turned into a dirty word. But patience can save you from a lot of problems, least of which are financial difficulties.

Before you consider signing up for a “No or Low Qualifying Mortgage” check out the Federal Trade Commission (FTC) website.

I’m Attorney Francine Ward, and what do you think? Join the conversation on my Facebook Law Fan Page, my Twitter Law Page, my Google+ Page, or in one of my LinkedIn Groups.

SEC. Twitter. Tweet. Netflix. Facebook.


SEC Regulation Fair Disclosure.

Twitter. Facebook. SEC

Twitter. Facebook. SEC

In August of 2000, the Security and Exchange Commission (SEC) announced a rule that publicly traded companies must divulge material information to all investors at the same time. In other words, the information cannot be released to only certain investors and cannot be released piecemeal. The rule is referred to as SEC Regulation Fair Disclosure or the Regulation FD.

Since the implementation of SEC Regulation FD in 2000, much has changed, particularly the advent of Social Media venues e.g., Twitter and Facebook.

Netflix Gets it Wrong on Facebook.

In July of 2012 Netflix CEO Reed Hastings announced on his Facebook page figures on the company’s monthly viewership for the previous month, stating that “Netflix monthly viewing exceeded 1 billion hours for the first time ever in June.” The seemingly innocent post on the growing success of Netflix has landed Mr. Hastings in hot water with the SEC.

The SEC is not only looking into whether Netflix allegedly violated Regulation FD, but whether they also violated 10b-5.  Section 10b-5 deals with deceit and fraud in the selling or purchasing of securities, and is more commonly known as the insider trading statute.

The argument in defense of Netflix is that Facebook is indeed a public company, and therefore, there was no intent to hide information from certain investors or to favor others. Mr. Hastings has over 200,000 subscribers to his Facebook account.

In the past, the SEC has stated that a website or blog could be considered “public” in regards to Regulation FD as long as the website is recognized as a venue for distribution of information – if investors know to look for it there.

This case, once again, highlights the effects that the social media boom is having on businesses, small and large. Taking advantage of the benefits while avoiding the pitfalls can be challenging, to say the least.

Until next time, I’m Attorney Francine Ward helping you protect what’s yours. Feel free to join my conversation on my Law Facebook Fan Page, my Twitter Law Page, or in one of my LinkedIn Groups.