Four Key Elements You Need to Know About the proposed Regulation SP changes


It has been estimated a year after the Securities and Exchange Commission amendments to Regulation SP. When initially implemented Regulation SP requires financial services firms such as brokers and registered investment advisers, to have a privacy policy that safeguards customer identities. For the companies failed to review or comment on the changes you’re in luck because the SEC reopened the comment period on April 15, 2009.

is vital for registered investment advisers to review the proposed changes because the changes are important and should not be ignored. They will affect your business in the effort, cost and time

While changes are many, here are four key factors that Amendment :.

First, companies will be required to create and maintain a comprehensive “information security program.” What does this mean? The program would include written policies and procedures to protect customer records and data. The procedures would have to be detailed enough to cover administrative costs, technical and physical safeguards and should include how companies respond to unauthorized access.

Second, the scope of institutions covered by the Regulation SP will be broadened to include affiliates. Not only will the listed companies need a comprehensive information security program, and third party service providers will be required to maintain the same security. This means registered investment advisers will be required to secure outside help providers meet the changes subjective standards “comprehensive information security program.”

Third, companies must create policies and procedures that take data security violations. Data security violation include “sensitive personal information” is defined as “all personal, or combination of parts of personal information, which would allow unauthorized use, logging, or access to individual account or to establish a new account with individuals analyze information. “In the event of a violation, the business will need to create a written investigation into the incident, measures to control and prevent further unauthorized access, report violations to solicit customers and report violations and action taken regulators.

Fourth Amendment provides some relief (well, maybe) for representatives who change companies. Members will be allowed to hold limited information about their customers, they should move the company. This is an attempt by the SEC to loosen gridlock created by the passage of Regulation SP. Before SEC considered all customer information to be owned by the company and not the companies represented. When representatives left the company, they were required to give all its customers to register the company, do not keep information. This change would allow the representative to keep a record of “trade name, a general description of the type of account and the products owned by customers and contact information, including address, phone number and e-mail information.” Each company can afford this without the need to hide what the opt-out provision in its privacy policy.

The next series of articles will take a close look at the proposed changes because they marked increase your company’s time, labor and cost of implementing this burden. While we all agree protecting customer data is of utmost importance, which change could have a significant impact on the business day to day activity and profitability.


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