SEC Adopts Rule Amendments to Protect Client Information

The Securities and Exchange Commission (SEC) announced the adoption of amendments to Regulation S-P to modernize and improve the standards governing how certain financial institutions handle consumers’ nonpublic personal information.

The amendments revise the rules for broker-dealers, investment companies, registered investment advisors, and transfer agents to reflect the increased use of technology and associated risks that have evolved since the Commission first published Regulation S-P in 2000.

“These amendments to Regulation S-P will make critical updates to a rule first adopted in 2000 and help protect the privacy of customers’ financial data,” said SEC Chair Gary Gensler. “The basic idea for covered firms is if you’ve got a breach, then you’ve got to notify. That’s good for investors.”

The revisions compel broker-dealers, investment firms, registered investment advisors, and transfer agents to create documented policies and processes to “detect, respond to, and recover from unauthorized access to or use of customer information.”

The amendments require a notice “as soon as practicable”, but not later than 30 days, after becoming aware of an incident. The amendments will become effective 60 days after publication in the Federal Register.