A broker-dealer prepares to deliver its initial privacy disclosure under SEC Regulation S-P to newly onboarded retail clients. If the firm plans to share nonpublic personal information with nonaffiliated financial institutions, which of the following mechanisms satisfies the requirement to provide a reasonable means for customers to opt out?
- Providing a prominent check-off box on the privacy notice or an electronic link to an online opt-out formAnswer
- BRequiring the customer to write and mail a formal letter detailing their specific reasons for withholding consent
- CInforming customers that opt-out elections can only be executed upon closing the account and transferring assets
- DMandating that customers contact an independent state regulatory hotline during business hours to log their choice
Answer
Providing a prominent check-off box on the privacy notice or an electronic link to an online opt-out form satisfies the requirement for a reasonable opt-out mechanism.
Under SEC Regulation S-P, broker-dealers intending to disclose nonpublic personal financial information to nonaffiliated third parties must provide customers with a reasonable opportunity and means to opt out. Convenient methods such as a check-off box on the privacy notice, a toll-free telephone number, or an accessible electronic portal fulfill this standard.
Step-by-Step Solution
Key Concept
Regulation S-P Opt-Out Provisions