SOME ARE CALLING PRIVACY AND THE SOON TO BE AMENDED REG S-P “THE NEW AML” FOR BROKER-DEALERS
In March 2008, in response to increasing identity theft and concern for protection of customer privacy, the SEC announced significant proposed changes to Reg S-P. (SEC Notice). Comments on the proposed rules are due to the Commission by May 12, 2008. Many senior legal and compliance professionals attending the SIFMA CL Conference in Orlando, Florida compared the requirements of proposed Regulation S-P to the rigors of AML compliance. If adopted as proposed, the new privacy rules will present significant financial and administrative burdens to broker-dealers.
The proposed rules broaden the definition of non-public customer information and set forth stricter standards for handling, protecting, disposing and sharing customer information. The rules require regular privacy risk assessments and stricter identification and management of potential threats and vulnerabilities. They also set forth a road map for notifying customers of any actual or potential privacy breaches.
The Reg S-P amendments also include a new exception that will allow registered representatives or advisors moving from one financial services firm to a new firm to take certain limited customer information. This exemption appears to mirror the terms of the Broker Protocol which has been in place between and among numerous financial services firms for some time.
In March 2008, in response to increasing identity theft and concern for protection of customer privacy, the SEC announced significant proposed changes to Reg S-P. (SEC Notice). Comments on the proposed rules are due to the Commission by May 12, 2008. Many senior legal and compliance professionals attending the SIFMA CL Conference in Orlando, Florida compared the requirements of proposed Regulation S-P to the rigors of AML compliance. If adopted as proposed, the new privacy rules will present significant financial and administrative burdens to broker-dealers.
The proposed rules broaden the definition of non-public customer information and set forth stricter standards for handling, protecting, disposing and sharing customer information. The rules require regular privacy risk assessments and stricter identification and management of potential threats and vulnerabilities. They also set forth a road map for notifying customers of any actual or potential privacy breaches.
The Reg S-P amendments also include a new exception that will allow registered representatives or advisors moving from one financial services firm to a new firm to take certain limited customer information. This exemption appears to mirror the terms of the Broker Protocol which has been in place between and among numerous financial services firms for some time.
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