Recognizing that business entities now conduct a majority of their operations with the assistance of electronic programs and databases, and that a significant amount of business and personal information may be stored electronically in those systems, state legislatures and financial regulators are taking steps to identify the risks inherent in such computer-driven operations. Covered companies that are registered with the SEC and that collect or electronically store their clients' and employees' personal information run the risk of experiencing an unauthorized breach of that data by hacking, inadvertent dissemination, loss or theft of portable devices containing such information, or other unauthorized disclosure. If a data breach occurs, a covered company's responsibility to disseminate information about the breach may be broadened under the SEC's recent guidance.

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