Examkin

Question

Difficulty: MediumAccount Statements, Privacy Protection, and Regulation S-P

Under SEC Regulation S-P and FINRA regulatory standards regarding customer account statements and privacy disclosures, which of the following statements are correct?

  1. A broker-dealer must deliver an initial privacy notice to a retail customer no later than when the customer relationship is established.Answer
  2. Broker-dealers must send customer account statements at least quarterly, and monthly for any month in which security or dividend activity occurs.Answer
  3. C
    A broker-dealer complies with Regulation S-P opt-out rules by requiring consumers to send a hand-written physical letter as the sole opt-out method.
  4. D
    Regulation S-P privacy notices are only required to be delivered to retail clients when an account is formally closed or liquidated.

Answer

Broker-dealers must provide an initial privacy notice no later than when establishing a customer relationship, and must send account statements at least quarterly (or monthly during any month with account activity). Requiring a written letter as the sole opt-out method is unreasonable, and privacy notices are required at account opening and annually thereafter.
Under SEC Regulation S-P, broker-dealers must deliver an initial privacy notice to retail customers no later than when the customer relationship is established. Additionally, FINRA rules mandate that broker-dealers send customer account statements at least quarterly, but monthly for any month in which trading, dividend/interest payout, or security transfer activity occurs.

Step-by-Step Solution

1
Evaluate privacy disclosure delivery timing under SEC Regulation S-P.
Initial privacy notices must be delivered at or before account opening, with annual notices delivered throughout the relationship.
Regulation S-P governs the safeguarding and sharing disclosure of retail customer nonpublic personal information.
2
Examine opt-out provision standards under Regulation S-P.
Opt-out methods must be reasonable and accessible, such as a electronic opt-out form or toll-free telephone number.
Requiring custom written letters creates unreasonable procedural obstacles for consumers.
3
Review account statement delivery frequency under FINRA rules.
Account statements must be delivered quarterly at a minimum, but monthly whenever account trading or cash movement takes place.
Regular statement delivery ensures customers maintain clear visibility into portfolio holdings and account activity.

Key Concept

Regulation S-P privacy notice delivery requirements and FINRA account statement delivery frequency rules.
Rate this question

Topics

Account Statements, Privacy Protection, and Regulation S-P