Securities Industry Essentials (SIE) ExamOverview of Regulatory FrameworkMedium
A broker-dealer firm's compliance officer is educating new registered representatives (RRs) about the firm's obligations to protect customer privacy. Which regulation specifically requires broker-dealers to send privacy notices to customers and protect their nonpublic personal information?
- ARegulation FD
- BRegulation D
- CRegulation T
- DRegulation S-P
Show answer & explanationAnswer & explanation
Correct answer: D. Regulation S-P
Regulation S-P (Privacy of Consumer Financial Information) requires financial institutions, including broker-dealers, to establish policies for protecting customer nonpublic personal information and to provide privacy notices.
Why the other options are wrong
- A. Regulation FD (Fair Disclosure) prevents selective disclosure of material nonpublic information by public companies.
- B. Regulation D provides exemptions from SEC registration for certain private offerings.
- C. Regulation T governs the extension of credit by broker-dealers (margin accounts).
Regulation S-P
Regulation S-P requires financial institutions, including broker-dealers, to protect the privacy of customer nonpublic personal information and to provide customers with privacy notices.
- Mandates privacy notices.
- Requires safeguarding of nonpublic personal information.
- Allows customers to opt out of information sharing with non-affiliates.
Memory trick: S-P Safeguards Personal Privacy.