A member firm is reviewing its compliance policies regarding Regulation S-P privacy notices, customer opt-out provisions, and FINRA customer account statement delivery schedules. Which of the following statements regarding these regulatory requirements are correct?
- Providing a customer with a toll-free telephone number or a designated electronic opt-out link constitutes a reasonable means for exercising opt-out rights under Regulation S-P.Answer
- A broker-dealer must deliver customer account statements at least monthly during any month in which activity occurs, and at least quarterly when no activity occurs in the account.Answer
- CA broker-dealer may defer delivering an initial Regulation S-P privacy notice to a new retail customer until 30 calendar days after account opening, provided no nonpublic personal information is shared during that window.
- DFirms may satisfy Regulation S-P opt-out requirements by requiring customers to draft and mail a custom physical letter, as written mail is designated as the sole standard for privacy opt-outs.
Answer
The statements confirming that toll-free telephone numbers/electronic links are reasonable opt-out methods and that statement delivery must be monthly for active accounts and quarterly for inactive accounts are both correct.
Under Regulation S-P, broker-dealers must provide customers with reasonable opt-out methods, such as electronic links, prepaid response cards, or toll-free telephone numbers. Additionally, account statements are required monthly when activity occurs (or penny stocks are held) and at least quarterly for inactive accounts under FINRA guidelines.
Step-by-Step Solution
Key Concept
Regulation S-P Privacy Protections & Customer Statement Delivery Frequencies