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Security breach charges settled

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NEW YORK--CS STARS L.L.C. has settled with the New York attorney general's office over alleged failure to comply with the state's security breach notification law.

According to the attorney general's office, the case arose on May 9, 2006, when an employee of the Marsh Inc. affiliate noticed that a computer containing personal material on workers compensation beneficiaries was missing. The data belonged to the New York Special Funds Conservation Committee, a nonprofit entity that assists in providing workers compensation benefits.

The attorney general's office said CS STARS did not notify proper authorities of the security breach until June 29, 2006. It began notifying the approximately 540,000 potentially affected people of the security breach in July, and authorities recovered the missing computer later in the month. The Federal Bureau of Investigation determined that the personal data had not been improperly accessed.

New York's Information Security Breach and Notification Law holds that any business that maintains private information that it does not own must notify the owner of the data as soon as a breach is discovered and must notify all affected consumers in the "most expedient time possible," according to the attorney general's office.

Under a settlement announced on April 26, CS STARS--which had cooperated fully with the state investigation and which did not admit to any violation of the law--agreed "to implement precautionary procedures and comply with New York's notification law in the event of a security breach," said the attorney general's office in a statement announcing the settlement. The state said that CS STARS also agreed to pay the attorney general's office more than $60,000 for costs related to the investigation.

"CS STARS is pleased that no customer data was used inappropriately by the individual who stole the computer from our premises and that there is no assertion of guilt leveled by the New York attorney general's office," said a spokesman for CS STARS. "We are pleased to now have this matter behind us and have no further comment."