A broker-dealer receives a formal request from a self-regulatory organization (SRO) conducting a routine compliance examination. The request requires the firm to submit account files and transaction records containing customer names, Social Security numbers, and asset balances. Under SEC Regulation S-P, which of the following statements correctly describes the firm's obligation regarding customer privacy and opt-out disclosures?
- The firm must comply with the examination request and may disclose the nonpublic personal information without providing customers an opportunity to opt out.Cevap
- BThe firm must delay providing the records until each affected customer is sent a special privacy notice and given at least 30 days to opt out.
- CThe firm is strictly prohibited from releasing nonpublic personal information to any entity outside the broker-dealer under any circumstances.
- DThe firm may release the records only if the SRO obtains written consent directly from each individual customer prior to document submission.
Cevap
The broker-dealer must comply with the examination request and may disclose the nonpublic personal information without providing customers an opportunity to opt out.
Under SEC Regulation S-P, broker-dealers are required to protect customer nonpublic personal information (NPI) and provide customers with initial and annual privacy notices as well as a reasonable opportunity to opt out before sharing information with nonaffiliated third parties. However, Regulation S-P includes specific statutory exceptions where opt-out notices are not required. One major exception allows firms to disclose NPI to nonaffiliated third parties to comply with federal, state, or local laws, court orders, or regulatory investigations and examinations conducted by self-regulatory organizations (SROs) like FINRA.
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Regulation S-P Privacy Notice Exemptions for Regulatory and Compliance Disclosures
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