Chapter 3 - Reg S-P, Reg A-M, & FACT ACT

Question 1

Regulation S-P

Answer 1

Member firms must provide an initial privacy notice to new customers when an account is opened and must provide an annual privacy notice to all customers. Regulation S-P permits firms to disclose nonpublic personal information to unaffiliated third parties unless the customer has elected to opt out of the disclosure. Examples of nonpublic personal information include a customer’s Social Security number, account balances, transaction history, the fact that the individual was at one time acustomer, and any information collected through a consumer reporting agency or an internet cookie.

Question 2

Regulation S-AM

Answer 2

Regulation S-AM is the sister to Regulation S-P and states that a broker-dealer is prohibited from using eligibility information received, such as information regarding the consumer’s transactions from an affiliate company, to make a marketing solicitation to a prospective customer

Question 3

FACT ACT

Answer 3

The Fair and Accurate Credit Transactions Act of 2003 (FACT Act) requires that each financial institution or creditor develop and implement a written program to detect, prevent,and mitigate identity theft in connection with the opening of certain accounts or the maintenance of certain existing accounts (referred to as the Red Flags Rule).