Anyone with a Smart Cover can break into your “password-protected” iPad 2. This issue occurs in iOS 5, but we’re hearing uncorroborated reports of it also working in earlier versions of iOS 4.3.

What the flaw allows:

As you can see in the video above, a Smart Cover can essentially unlock an iPad 2. The person who unlocks your iPad 2 will not have complete access to your iPad, but will be able to gain entrance to whatever you locked your iPad 2 on. If your iPad 2 went to sleep in Mail, Safari, Messages, Contacts, or Maps, you can imagine the sorts of personal information that can be viewed on your iPad. If you left your iPad 2 on its Home screen, the person can view which applications you have on your device, control media from the multitasking bar, but not much else.

How to re-create it:

1) Lock a password protected iPad 2

2) Hold down power button until iPad 2 reaches turn off slider

3) Close Smart Cover

4) Open Smart Cover

5) Click cancel on the bottom of the screen

(src:9to5mac.com)