Mcgraw hill education august 2019 business law newsletter

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A monthly newsletter from McGraw-Hill Education

August 2019 Volume 11, Issue 1


Hot Topics


Video Suggestions 10

Ethical Dilemma


Teaching Tips


Chapter Key


Dear Professor,

A new and exciting academic year is upon us! Welcome to McGraw-Hill Education's August 2019 issue of Proceedings, a newsletter designed specifically with you, the Business Law educator, in mind. Volume 11, Issue 1 of Proceedings incorporates "hot topics" in business law, video suggestions, an ethical dilemma, teaching tips, and a "chapter key" cross-referencing the August 2019 newsletter topics with the various McGraw-Hill Education business law textbooks.

You will find a wide range of topics/issues in this publication, including:

1. The United Kingdom's move toward banning bitcoin and other cryptocurrencies;

2. The Capitol One data breach;

3. The Bronx, New York District Attorney's decision not to pursue a grand jury indictment against Juan Rodriguez in the `hot car' deaths of his twins;

4. Videos related to a) the wrongful conviction of Pennsylvanian John Miller and b) pharmaceutical giant Allergan, PLC's worldwide recall of Biocell textured breast implants and tissue expanders that have been linked to a rare form of cancer;

5. An "ethical dilemma" related to the Allergan, PLC breast implant and tissue expander product recall; and

6. "Teaching tips" related to Video 1("Man Walks Free after 21 Years in Prison When a Witness in the Murder Case Admits to the Killing"), Video 2 ("Worldwide Recall Issued for Textured Breast Implants Tied to Rare Cancer") and the Ethical Dilemma ("Allergan Voluntarily Recalls BIOCELL? Textured Breast Implants and Tissue Expanders") of the newsletter.

May this academic year be your most successful one to date!

Jeffrey D. Penley, J.D. Senior Professor of Business Law and Ethics Catawba Valley Community College Hickory, North Carolina

Business Law and Legal Environment of Business Newsletter1


A monthly newsletter from McGraw-Hill Education

August 2019 Volume 11, Issue 1

Of Special Interest

This section of the newsletter covers three (3) topics:

1) The United Kingdom's move toward banning bitcoin and other cryptocurrencies;

2) The Capitol One data breach; and

3) The Bronx, New York District Attorney's decision not to pursue a grand jury indictment against Juan Rodriguez in the `hot car' deaths of his twins.

Hot Topics in Business Law

Article 1: "Bitcoin Has `No Intrinsic Value,' as U.K. `Moves Towards' Crypto Ban"

According to the article, Bitcoin and cryptocurrency regulation has been pushed into the limelight over recent weeks, thanks to social media giant Facebook's high profile plans to launch its own potential rival to bitcoin sometime next year.

The bitcoin price, which had been climbing on rumors that big technology companies were taking an interest in bitcoin and cryptocurrencies, has plateaued at around $10,000 per bitcoin after a number of countries rebuffed Facebook's plans, unveiled in June.

Now, the U.K.'s financial services watchdog has warned potential investors that bitcoin and cryptocurrencies have "no intrinsic value," with some taking the caution as a signal the country could be moving towards a bitcoin ban.

"This is a small, complex and evolving market covering a broad range of activities," said Christopher Woolard, executive director of strategy and competition at the U.K. Financial Conduct Authority (FCA), which oversees London's huge banking industry.

"Today's guidance will help clarify which crypto-asset activities fall inside our regulatory perimeter," Woolard added, with the FCA warning: "Consumers should be cautious when investing in such crypto-assets and should ensure they understand and can bear the risks involved with assets that have no intrinsic value."

The FCA branding bitcoin and cryptocurrencies as without "intrinsic value" is likely to rile many bitcoin believers who have long argued blockchain technology, which underpins bitcoin and most other cryptocurrencies, gives the digital tokens value.

"It is technically true that cryptocurrencies have no `intrinsic value' when compared to share ownership in actual companies, however there are many examples where a marketplace bestows value on an intangible asset," Jon Ostler, of comparison site , told the U.K.'s Telegraph newspaper. "For example, the brand of `bitcoin' itself has value and although its future

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A monthly newsletter from McGraw-Hill Education

August 2019 Volume 11, Issue 1

place in society is still unclear, it is one of the most likely coins to stay the course."

The warning from the U.K. comes shortly after U.S. president Donald Trump unleashed a scathing attack on bitcoin and cryptocurrencies, comments that were then echoed by other senior officials in his administration, including Treasury secretary Steven Mnuchin who branded bitcoin and cryptocurrencies a "national security issue."

It's thought that Trump's attacks on bitcoin and crypto were in direct response to Facebook's libra cryptocurrency project, which, if successful, could undermine the international dominance of the U.S. dollar.

"Although not a ban, (the U.K.'s FCA warning is) a move in that direction," said Herbert Sim, head of business development from Broctagon Fintech Group. "This lack of enthusiasm is shared by several countries; the U.S. with its scrutiny of libra, and India, who are looking to implement a similar ban on cryptocurrencies which are not state regulated. These movements could end up coming back to bite. The international competition on cryptocurrencies is heating up and there are huge risks in being left behind."

Meanwhile, the watchdog warned investing in what it called "unregulated crypto-assets" will not be covered by the Financial Services Compensation Scheme, which pays out if the investment collapses.

"It remains possible in the future that if an unregulated token is subject to common acceptance and usage in the U.K. then either the FCA or the Bank of England will reconsider this position in order to ensure that adequate consumer protection exists," said Tim Dolan, partner at law firm Reed Smith.

Discussion Questions

1. What is currency. What is cryptocurrency?

Currency is defined as a system of money in general use in a particular country. It is also defined as the fact or quality of being generally accepted or in use. Cryptocurrency is defined as a general currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.

2. Are cryptocurrencies like bitcoin really currency?

In terms of whether cryptocurrencies like bitcoin are really currency, student opinion may vary. They are not "generally" accepted or in use, and they are not issued by a central (i.e., governmentassociated) bank. Those who consider cryptocurrency as an acceptable medium of exchange would argue that it is a new form of currency, and that "non-traditional, non-government regulated" is actually a positive development.

3. Do you support the U.K.'s move toward banning bitcoin and other cryptocurrencies? Why or why not?

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A monthly newsletter from McGraw-Hill Education

August 2019 Volume 11, Issue 1

This is an opinion question, so student replies may vary. Cryptocurrencies are not backed by the "full faith and credit" of an issuing government, so they are subject to "wild swings" in value (The value of cryptocurrencies is based solely on the demand for the currency relative to the supply, which determines an "equilibrium"--i.e., market--price).

Article 2: "Capital One Data Breach Compromises Data of Over 100 Million"

According to the article, A software engineer in Seattle hacked into a server holding customer information for Capital One and obtained the personal data of over 100 million people, federal prosecutors said recently, in one of the largest thefts of data from a bank.

The suspect, Paige Thompson, 33, left a trail online for investigators to follow as she boasted about the hacking, according to court documents in Seattle, where she was arrested and charged with one count of computer fraud and abuse.

Ms. Thompson, who formerly worked for Amazon Web Services, which hosted the Capital One database that was breached, was not shy about her work as a hacker. She is listed as the organizer of a group on Meetup, a social network, called Seattle Warez Kiddies, described as a gathering for "anybody with an appreciation for distributed systems, programming, hacking, cracking."

The F.B.I. noticed her activity on Meetup and used it to trace her other online activities, eventually linking her to posts describing the data theft on Twitter and the Slack messaging service.

"I've basically strapped myself with a bomb vest," Ms. Thompson wrote in a Slack post, according to prosecutors, "dropping capital ones dox and admitting it."

Online, she used the name "erratic," investigators said, adding that they verified her identity after she posted a photograph of an invoice she had received from a veterinarian caring for one of her pets.

According to court papers and Capital One, Ms. Thompson stole 140,000 Social Security numbers and 80,000 bank account numbers in the breach.

In addition to the tens of millions of credit card applications stolen, the company said on Monday, the breach compromised one million Canadian social insurance numbers -- the equivalent of Social Security numbers for Americans.

The information came from credit card applications that consumers and small businesses had submitted as early as 2005 and as recently as 2019, according to Capital One, which is the nation's third-largest credit card issuer, according to its website.

"Based on our analysis to date," the bank said in a statement, "we believe it is unlikely that the information was used for fraud or disseminated by this individual."

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A monthly newsletter from McGraw-Hill Education

August 2019 Volume 11, Issue 1

The bank also said it expected that the breach would cost it up to $150 million, including paying for credit monitoring for affected customers. Last week, the credit bureau Equifax settled claims from a 2017 data breach that exposed sensitive information on over 147 million consumers, costing it about $650 million.

Amazon Web Services hosts the remote data servers that companies use to store their information, but large enterprises like Capital One build their own web applications on top of Amazon's cloud data so they can use the information in ways specific to their needs.

The F.B.I. agent who investigated the breach said in court papers that Ms. Thompson had gained access to the sensitive data through a "misconfiguration" of a firewall on a web application. That allowed the hacker to communicate with the server where Capital One was storing its information and, eventually, obtain customer files.

Amazon said its customers fully controlled the applications they built, and Capital One said in a news release that it had "immediately fixed the configuration vulnerability" once it discovered the problem. Amazon said it had found no evidence that its underlying cloud services were compromised.

On July 17, a tipster wrote to a Capital One security hotline, warning that some of the bank's data appeared to have been "leaked," the criminal complaint said.

Once alerted to the breach, the authorities found what they said were Ms. Thompson's online boasts that she wanted to "distribute" the materials. On June 27, she also listed "several companies, government entities and educational institutions," according to court papers, which investigators interpreted to be other hacks she "may have committed."

Other users in that channel, on Slack, expressed alarm. One said "don't go to jail plz," according to the complaint.

Recently, F.B.I. agents executed a search warrant on Ms. Thompson's house. They seized "numerous digital devices," prosecutors said, and found on them "items that referenced Capital One" and Amazon, which they referred to in the complaint only as the "cloud computing company."

"I am deeply sorry for what has happened," the bank's chief executive, Richard D. Fairbank, said in a statement. "I sincerely apologize for the understandable worry this incident must be causing those affected, and I am committed to making it right."

Capital One said the bank account numbers were linked to customers with "secured" credit cards. Secured cards require customers to put forth a sum of money -- $200 or $250 -- in exchange for a card.

"It's a way for banks to minimize the risk associated with lending to folks who don't have perfect credit or who are just getting started," said Matt Schulz, an analyst for Compare Cards. These customers are vulnerable, he said, and "often have very little financial margin for error."

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A monthly newsletter from McGraw-Hill Education

August 2019 Volume 11, Issue 1

While the breach was possible because of a security lapse by Capital One, it was aided by Ms. Thompson's expertise. Information posted on social media shows she worked at one time for Amazon, as an engineer for the same server business that court papers said Capital One was using.

Capital One is a longstanding and prominent client of Amazon's. In a 2015 keynote at Amazon Web Services' main annual conference, a Capital One executive gave a presentation on the company's efforts to move critical parts of its technology to Amazon's cloud infrastructure so it could focus on building consumer applications and other needs.

Ms. Thompson will remain in federal custody until a hearing, prosecutors said. Her lawyer did not respond to an email seeking comment.

Capital One has faced security breaches before, and they are a constant, and costly, threat for the financial industry. The chief of JPMorgan Chase, Jamie Dimon, has said his bank spends almost $600 million a year on security. Bank of America's chief has said in the past that the bank has a "blank check" for cybersecurity.

In a breach in 2017, Capital One notified customers that a former employee may have had access for nearly four months to their personal data, including account numbers, telephone numbers, transaction history and Social Security numbers. The company reported a similar breach involving an employee in 2014.

On Meetup, Ms. Thompson posted enthusiastically about hacking. "I've been meaning to put together something like a hack night or somethng soon," she wrote on May 13.

"It's been a crazy past two weeks, and my cat had to go to the vet everyday last week but she's finally starting to recover maybe this wednesday in capitol hill? I'll do an all day thing at starbucks until they close, I'e got nothing better to do."

Discussion Questions

1. Define computer fraud.

Computer fraud is the act of using a computer to take or alter electronic data, or to gain unlawful use of a computer or system. In the United States, computer fraud is specifically proscribed by the Computer Fraud and Abuse Act, which criminalizes computer-related acts under federal jurisdiction.

2. As the article indicates, Paige Thompson was "not shy" about her work as a hacker. In your reasoned opinion, should this mitigate (i.e., lessen) the criminality of her conduct? Why or why not?

Although student opinions may vary in response to this question, in your author's opinion the fact that Ms. Thompson was "not shy" (and even boastful) about her work as a hacker should not mitigate the criminality of her conduct; if anything, it may actually aggravate (enhance) the criminality of her conduct.

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