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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The agency charged Voya Financial Advisors Inc. last September with violating Reg S-P or the Safeguards Rule and the Identity Theft Red Flags Rule.
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.