An investor who does not hold an account with Apex Securities visits the firm's branch office to purchase a one-time cashier's check service. The investor completes the single transaction without opening a brokerage account or establishing an ongoing business relationship. Apex Securities maintains a strict policy of never disclosing nonpublic personal information to nonaffiliated third parties. Under SEC Regulation S-P, which requirement governs privacy notice delivery to this investor?
- Apex Securities is not required to provide a privacy notice because the investor is a consumer and the firm does not disclose nonpublic personal information to nonaffiliated third parties.Answer
- BApex Securities must deliver an initial privacy notice at the time of the transaction and send annual privacy notices for as long as transaction records are retained.
- CApex Securities must provide an initial privacy notice within 30 calendar days following the execution of the cashier's check purchase.
- DApex Securities must obtain a signed opt-out election form from the investor prior to processing the cashier's check transaction.
Answer
Apex Securities is not required to provide a privacy notice because the investor is classified as a consumer, and the firm does not share nonpublic personal information with nonaffiliated third parties.
Under SEC Regulation S-P, an individual who obtains a financial product or service on a one-time basis (such as buying a cashier's check or completing a wire transfer) without opening an account is classified as a 'consumer.' Broker-dealers are only required to provide an initial privacy notice to a consumer if the firm intends to share the consumer's nonpublic personal information with nonaffiliated third parties. Since Apex Securities does not share information with nonaffiliated third parties, no privacy notice is required.
Step-by-Step Solution
Key Concept
Consumer vs. Customer Privacy Notice Requirements under SEC Regulation S-P