The Securities and Exchange Commission is warning advisors and broker-dealers in a just-released Risk Alert to review their policies and procedures regarding Regulation S-P, the privacy rule, as a host of deficiencies are being spotted in exams.
The Office of Compliance Inspections and Examinations provides a list of compliance issues related to Reg S-P, the primary SEC rule regarding privacy notices and safeguard policies of investment advisors and broker-dealers.
Reg S-P requires BDs and advisors to provide a “clear and conspicuous notice” to customers that accurately reflects the firm’s privacy policies not less than annually, and to deliver a clear and conspicuous notice explaining their right to opt out of some disclosures of non-public personal information about the customer to nonaffiliated third parties.
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In the Tuesday Risk Alert, OCIE details the most common deficiencies or weaknesses cited in exams.
Examiners observed registrants that did not provide Initial Privacy Notices, Annual Privacy Notices and Opt-Out Notices to their customers. “When such notices were provided to customers, the notices did not accurately reflect firms’ policies and procedures,” the alert states.