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Question

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

Under SEC Regulation S-P, which of the following mechanisms is considered an acceptable, reasonable method for a retail customer to opt out of having their nonpublic personal information shared with nonaffiliated third parties?

  1. Providing a prominent electronic link or a toll-free telephone number for opting outAnswer
  2. B
    Requiring the customer to write and mail a custom physical letter detailing their request
  3. C
    Requiring the customer to schedule an in-person appointment at a principal branch office
  4. D
    Discontinuing account access until the customer completes a written opt-out authorization

Answer

Providing a prominent electronic link or a toll-free telephone number for opting out
Under SEC Regulation S-P, broker-dealers must provide a reasonable and convenient method for customers to opt out of having their nonpublic personal information shared with nonaffiliated third parties. Acceptable methods include a toll-free phone number, a check-off box on a privacy notice, or a prominent electronic link.

Step-by-Step Solution

1
Identify the core requirement of SEC Regulation S-P regarding opt-out mechanisms.
Broker-dealers must afford consumers and customers a simple, reasonable, and convenient means to opt out of information sharing with nonaffiliated third parties.
Reg S-P protects nonpublic personal financial information by preventing firms from placing unreasonable burdens on customer privacy elections.
2
Evaluate the compliance of each proposed opt-out method.
Toll-free telephone numbers, online links, and check-off forms are compliant, whereas custom written letters or mandatory branch visits are considered unreasonable burdens.
The SEC designed Regulation S-P to ensure opting out does not require excessive effort or technical writing from retail investors.

Key Concept

Regulation S-P Opt-Out Mechanisms
Estimated Time:45s
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Topics

Account Statements, Privacy Protection, and Regulation S-P