A recently discovered security flaw in the Internet Explorer and Opera browsers may allow improper access to certain local files. A potential exploit can then be created in association with the local Flash data file to allow a malicious user to gain access to information stored on the local machine.
Macromedia has released an updated version of Flash Player (7,0,19,0) that stores local data in a way that prevents a malicious user from gaining access to that data (except through the Flash player.) This version can be downloaded from the Macromedia Player Download Center.
Update to Flash Player Addressing Local Shared Object Security (Macromedia Security Bulletin MPSB03-08)
Macromedia Flash Player Predictable Data Location Weakness (Secunia Advisory, December 17, 2003)