SEC ANNOUNCES IMPORTANT CHANGES TO RULE S-P COVERING PRIVACY OF CUSTOMER FINANCIAL AND PERSONAL INFORMATION

 The Series 6 Exam covers SEC Rules including Regulation S-P on the privacy of consumer financial information and the safeguarding of customers' personal information. FINRA specifically lists Regulation S-P in its Series 6 Content Outline in Section 2.2.

Recently the SEC has amended Regulation S-P "to address the expanded use of technology and corresponding risks that have emerged since the Commission originally adopted Regulation S-P in 2000." 

The amendments cover situations where computer hackers unlawfully view, copy or steal a firm's customer accounts records. Brokerage and advisory firms, including mutual fund firms, are required to detail steps in writing to be taken when a brokerage firm suffers such a break-in. Firms must also report such events to the SEC as soon as possible, but no later than 30 days of occurrence. Furthermore, firms must notify customers whose accounts are, or reasonably likely to be, among those breached or stolen.

Here's how the SEC describes the added requirements:

"The amendments require covered institutions to develop, implement, and maintain written policies and procedures for an incident response program that is reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information. The amendments also require that the response program include procedures for, with certain limited exceptions, covered institutions to provide notice to individuals whose sensitive customer information was or is reasonably likely to have been accessed or used without authorization."

"The amendments require a covered institution to provide notice as soon as practicable, but not later than 30 days, after becoming aware that an incident involving unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. The notice must include details about the incident, the breached data, and how affected individuals can respond to the breach to protect themselves."

Bob Eder in his Study for the Series 6 Exam covers Regulation S-P in detail.

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For questions about Bob Eder's Study for the Series 6 Exam, or questions in general about the Series 6 Exam, or about Regulation S-P, simply email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001.

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