Federal Regulators Issue Model Privacy Notice


Funds & Advisers

Dec. 1, 2009 -- On December 1, 2009, eight federal agencies that regulate financial institutions, including the SEC, adopted a Final Rule that provides a voluntary model privacy form (Model Form) that financial institutions may use to comply with their privacy notice delivery obligations under the Gramm-Leach-Bliley Act (GLBA). While the Model Form is not required, its use establishes a safe harbor for complying with the delivery obligation of the privacy notice. Institutions not using the model form must follow specific criteria within their notices as provided in the rule to obtain the safe harbor benefit.

The SEC implements GLBA privacy requirements through Regulation S-P, which requires registered investment companies and advisers to deliver an initial and annual privacy notice to customers. The privacy notice describes a firmís practices with regard to sharing customer information, and provides customers an opportunity to restrict a firm from sharing their information.

The new Model Form replaces the Sample Clauses the SEC provided to firms as a guide in drafting their privacy notices. There are two versions of the Model Form available: (1) model form with the opt-out (this version includes opt-out by telephone, online, and/or mail-in form); and (2) model form with no opt-out (this version does not contain the opt-out features, but provides phone number and/or website contact for customers with questions). Both versions contain a disclosure table for institutions to complete indicating how personal information is shared and whether the customer can limit this sharing.

Institutions are allowed to incorporate the model form into another document, so long as it is done in such a way that meets the requirements of the privacy rule and follows the model form instructions.

The Final Rule became effective on December 31, 2009. To ease the compliance burden for firms that currently have privacy notices based on the SECís Sample Clauses, the rule allows a firm to rely on its current notice until December 31, 2010. SEC-regulated financial institutions will not be able to rely on the safe harbor by using the Sample Clauses in notices delivered or posted on or after January 1, 2011. The SEC provides an online form builder to assist firms with creating and customizing their Privacy Notices should they opt to use the Model Form. Please contact Vista360 if you have any questions with regard to this new Model Form.

 

 

 

 

 

 

 

 

 

   
 
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