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[FundLaw] SEC Releases Proposed Privacy Rules

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  • Baker, John
    The SEC yesterday released its draft of the Gramm-Leach-Bliley Act consumer privacy rules, which it calls Regulation S-P. The release was posted late this
    Message 1 of 3 , Mar 3 6:15 PM
    • 0 Attachment
      The SEC yesterday released its draft of the Gramm-Leach-Bliley Act
      consumer privacy rules, which it calls Regulation S-P. The release was
      posted late this afternoon on the SEC's web site at

      http://www.sec.gov/rules/proposed/34-42484.htm

      The SEC draft is generally similar to the banking agencies' proposal
      but tailored to the securities industry, especially in the examples. The
      rules would apply to all broker-dealers, all investment companies, and all
      SEC-registered investment advisers, and would protect nonpublic personal
      information about individuals who obtain financial products or services for
      personal, family, or household purposes. Essentially following the banking
      agencies' Alternative B (see prior message below), nonpublic personal
      information would not include information that you reasonably believe is
      lawfully made available to the general public from public sources. However,
      the SEC also invites comment whether the more stringent Alternative A should
      apply.

      The definitions of "consumer" and "customer" are particularly
      finely-tuned. A consumer is an individual who obtains or has obtained a
      financial product or service from you that is to be used primarily for
      personal, family, or household purposes (and that individual's legal
      representative). An individual who provides nonpublic personal information
      when seeking to obtain brokerage or advisory services is a consumer, even if
      no brokerage or advisory relationship is established. However, an
      individual who provides you with name, address, and areas of investment
      interest in requesting a prospectus or brochure is not a consumer. An
      individual is not a consumer when the individual purchases an interest in
      your investment company shares only through a broker or investment adviser
      who is the record owner of those shares.

      A customer is a consumer who has a customer relationship with you.
      A consumer who opens an account with an introducing broker is a customer of
      both the introducing broker and the clearing broker, and a customer who
      purchases investment company shares in his or her own name through a broker
      or investment adviser is a customer of both the investment company and the
      broker or investment adviser. A customer relationship will exist if you
      hold securities or other assets as collateral for a third-party's loan to
      the consumer (even if you do not effect any transactions on behalf of the
      consumer), or if you regularly effect or engage in securities transactions
      with or for a consumer (even if you do not hold any assets of the consumer).
      However, a consumer who does not establish an account with you does not have
      a continuing relationship with you if you provide brokerage services to the
      consumer on a one-time basis as an accommodation or to liquidate securities
      without the expectation of engaging in other transactions.

      Comments on the proposal are due March 31, 2000, and the rules are
      proposed to go into effect November 13, 2000. The federal banking agencies,
      National Credit Union Administration, and Federal Trade Commission have
      already made their privacy rule proposals. The easiest way to get copies of
      these is to go to the Federal Register web site at

      http://www.access.gpo.gov/su_docs/aces/aces140.html

      and search for "Gramm-Leach-Bliley".


      John M. Baker <JBaker@...>
      Stradley, Ronon, Stevens & Young, LLP
      2121 K Street, N.W., Suite 800, Washington, DC 20037
      (202) 261-3512 Fax (202) 261-3581
      FundLaw Listowner
      Http://www.egroups.com/group/fundlaw/info.html


      > -----Original Message-----
      > From: Baker, John
      > Sent: Thursday, February 03, 2000 11:22 AM
      > To: 'fundlaw@egroups.com'
      > Subject: Gramm-Leach-Bliley Privacy Proposal
      >
      > The Federal banking agencies today released their proposed consumer
      > privacy rules under the Gramm-Leach-Bliley Act. The OCC has posted the
      > joint notice of proposed rulemaking in PDF format on its web site at
      >
      > http://www.occ.treas.gov/ftp/regs/npr0203.pdf
      >
      > The rules are required to be promulgated in final form by May 12,
      > 2000, and to be effective by November 12, 2000, except to the extent the
      > rules provide for a later effective date; the proposal actually provides
      > for effectiveness on November 13, 2000. According to today's American
      > Banker (online access free today only from
      > http://www.americanbanker.com/), Senate Finance Committee Chairman Phil
      > Gramm says he will block any further privacy restrictions this year, as he
      > wants to see the effect of the new rules.
      >
      > The SEC and FTC have not yet posted their rule proposals, but they
      > are expected to be similar. The proposal includes the following:
      >
      > The financial institution must give all "customers," initially and
      > annually thereafter, a notice of the institution's privacy policy, but
      > need give "consumers" the notice only if the institution intends to
      > disclose their nonpublic personal information. Someone who provides
      > nonpublic personal information to the institution to induce it to enter
      > into a relationship is a consumer, even if the institution chooses not to
      > enter into the relationship. A one-time purchase of an insurance policy
      > (a product with a continuing nature) would be sufficient to establish a
      > customer relationship, while using an ATM or purchasing a money order
      > would not.
      >
      > There are two alternative definitions of "nonpublic personal
      > information." Under both definitions, the existence of the customer
      > relationship and customers' addresses and telephone numbers are
      > protected. Under Alternative A, information would lose its nonpublic
      > character if the institution actually derived it from a public source
      > (e.g., a telephone book or government real estate records); under
      > Alternative B, the institution could freely disclose the information if it
      > were merely available from a public source.
      >
      > The required privacy notice may be in writing or, if the customer
      > agrees, delivered electronically. Oral notices alone are insufficient.
      > Electronic delivery should be by e-mail (to a consumer who obtains a
      > financial product or service electronically) or on a web page that the
      > consumer is required to acknowledge to obtain the product or service in
      > question. If the consumer enters into a contract on the telephone, the
      > institution may provide the consumer with the option of receiving the
      > initial notice after providing the product or service so as not to delay
      > the transaction. If the customer does not have a choice as to the
      > institution (e.g., when the institution purchases the customer's loan in
      > the secondary market), the acquiring institution may provide the initial
      > notice within a reasonable time thereafter.
      >
      > A consumer must have a reasonable opportunity to opt out from
      > information-sharing. A consumer can always opt out, even after the
      > initial notice period, and the institution must comply with the direction
      > as soon as reasonably practicable. A financial institution may, but is
      > not required to, provide a partial opt-out option.
      >
      > John M. Baker <JBaker@...>
      > Stradley, Ronon, Stevens & Young, LLP
      > 2121 K Street, N.W., Suite 800, Washington, DC 20037
      > (202) 261-3512 Fax (202) 261-3581
      > FundLaw Listowner
      > Http://www.egroups.com/group/fundlaw/info.html
      >
    • Hayley Green
      Dear John, I was following the Gramm-Leach-Bliley Act put forth by the Fed in MFWire.com last month. I was wondering if you would mind if I followed up that
      Message 2 of 3 , Mar 6 6:03 AM
      • 0 Attachment
        Dear John,

        I was following the Gramm-Leach-Bliley Act put forth by the Fed in
        MFWire.com last month.
        I was wondering if you would mind if I followed up that article with the
        information below attributing it to you.
        Would you also be able to supply me with your title (is it "of counsel"?)
        and any opinions you may have.
        If you would like I can be reached at 212-736-6935.

        Thanks,
        Hayley Green


        -----Original Message-----
        From: Baker, John [mailto:JBaker@...]
        Sent: Friday, March 03, 2000 10:15 PM
        To: 'fundlaw@egroups.com'
        Subject: [FundLaw] SEC Releases Proposed Privacy Rules


        The SEC yesterday released its draft of the Gramm-Leach-Bliley Act
        consumer privacy rules, which it calls Regulation S-P. The release was
        posted late this afternoon on the SEC's web site at

        http://www.sec.gov/rules/proposed/34-42484.htm

        The SEC draft is generally similar to the banking agencies' proposal
        but tailored to the securities industry, especially in the examples. The
        rules would apply to all broker-dealers, all investment companies, and all
        SEC-registered investment advisers, and would protect nonpublic personal
        information about individuals who obtain financial products or services for
        personal, family, or household purposes. Essentially following the banking
        agencies' Alternative B (see prior message below), nonpublic personal
        information would not include information that you reasonably believe is
        lawfully made available to the general public from public sources. However,
        the SEC also invites comment whether the more stringent Alternative A should
        apply.

        The definitions of "consumer" and "customer" are particularly
        finely-tuned. A consumer is an individual who obtains or has obtained a
        financial product or service from you that is to be used primarily for
        personal, family, or household purposes (and that individual's legal
        representative). An individual who provides nonpublic personal information
        when seeking to obtain brokerage or advisory services is a consumer, even if
        no brokerage or advisory relationship is established. However, an
        individual who provides you with name, address, and areas of investment
        interest in requesting a prospectus or brochure is not a consumer. An
        individual is not a consumer when the individual purchases an interest in
        your investment company shares only through a broker or investment adviser
        who is the record owner of those shares.

        A customer is a consumer who has a customer relationship with you.
        A consumer who opens an account with an introducing broker is a customer of
        both the introducing broker and the clearing broker, and a customer who
        purchases investment company shares in his or her own name through a broker
        or investment adviser is a customer of both the investment company and the
        broker or investment adviser. A customer relationship will exist if you
        hold securities or other assets as collateral for a third-party's loan to
        the consumer (even if you do not effect any transactions on behalf of the
        consumer), or if you regularly effect or engage in securities transactions
        with or for a consumer (even if you do not hold any assets of the consumer).
        However, a consumer who does not establish an account with you does not have
        a continuing relationship with you if you provide brokerage services to the
        consumer on a one-time basis as an accommodation or to liquidate securities
        without the expectation of engaging in other transactions.

        Comments on the proposal are due March 31, 2000, and the rules are
        proposed to go into effect November 13, 2000. The federal banking agencies,
        National Credit Union Administration, and Federal Trade Commission have
        already made their privacy rule proposals. The easiest way to get copies of
        these is to go to the Federal Register web site at

        http://www.access.gpo.gov/su_docs/aces/aces140.html

        and search for "Gramm-Leach-Bliley".


        John M. Baker <JBaker@...>
        Stradley, Ronon, Stevens & Young, LLP
        2121 K Street, N.W., Suite 800, Washington, DC 20037
        (202) 261-3512 Fax (202) 261-3581
        FundLaw Listowner
        Http://www.egroups.com/group/fundlaw/info.html


        > -----Original Message-----
        > From: Baker, John
        > Sent: Thursday, February 03, 2000 11:22 AM
        > To: 'fundlaw@egroups.com'
        > Subject: Gramm-Leach-Bliley Privacy Proposal
        >
        > The Federal banking agencies today released their proposed consumer
        > privacy rules under the Gramm-Leach-Bliley Act. The OCC has posted the
        > joint notice of proposed rulemaking in PDF format on its web site at
        >
        > http://www.occ.treas.gov/ftp/regs/npr0203.pdf
        >
        > The rules are required to be promulgated in final form by May 12,
        > 2000, and to be effective by November 12, 2000, except to the extent the
        > rules provide for a later effective date; the proposal actually provides
        > for effectiveness on November 13, 2000. According to today's American
        > Banker (online access free today only from
        > http://www.americanbanker.com/), Senate Finance Committee Chairman Phil
        > Gramm says he will block any further privacy restrictions this year, as he
        > wants to see the effect of the new rules.
        >
        > The SEC and FTC have not yet posted their rule proposals, but they
        > are expected to be similar. The proposal includes the following:
        >
        > The financial institution must give all "customers," initially and
        > annually thereafter, a notice of the institution's privacy policy, but
        > need give "consumers" the notice only if the institution intends to
        > disclose their nonpublic personal information. Someone who provides
        > nonpublic personal information to the institution to induce it to enter
        > into a relationship is a consumer, even if the institution chooses not to
        > enter into the relationship. A one-time purchase of an insurance policy
        > (a product with a continuing nature) would be sufficient to establish a
        > customer relationship, while using an ATM or purchasing a money order
        > would not.
        >
        > There are two alternative definitions of "nonpublic personal
        > information." Under both definitions, the existence of the customer
        > relationship and customers' addresses and telephone numbers are
        > protected. Under Alternative A, information would lose its nonpublic
        > character if the institution actually derived it from a public source
        > (e.g., a telephone book or government real estate records); under
        > Alternative B, the institution could freely disclose the information if it
        > were merely available from a public source.
        >
        > The required privacy notice may be in writing or, if the customer
        > agrees, delivered electronically. Oral notices alone are insufficient.
        > Electronic delivery should be by e-mail (to a consumer who obtains a
        > financial product or service electronically) or on a web page that the
        > consumer is required to acknowledge to obtain the product or service in
        > question. If the consumer enters into a contract on the telephone, the
        > institution may provide the consumer with the option of receiving the
        > initial notice after providing the product or service so as not to delay
        > the transaction. If the customer does not have a choice as to the
        > institution (e.g., when the institution purchases the customer's loan in
        > the secondary market), the acquiring institution may provide the initial
        > notice within a reasonable time thereafter.
        >
        > A consumer must have a reasonable opportunity to opt out from
        > information-sharing. A consumer can always opt out, even after the
        > initial notice period, and the institution must comply with the direction
        > as soon as reasonably practicable. A financial institution may, but is
        > not required to, provide a partial opt-out option.
        >
        > John M. Baker <JBaker@...>
        > Stradley, Ronon, Stevens & Young, LLP
        > 2121 K Street, N.W., Suite 800, Washington, DC 20037
        > (202) 261-3512 Fax (202) 261-3581
        > FundLaw Listowner
        > Http://www.egroups.com/group/fundlaw/info.html
        >

        ------------------------------------------------------------------------
        This message was posted to the FundLaw list. It is not legal advice and
        does not create an attorney-client relationship. To Post a message, send it
        to fundlaw@.... To Unsubscribe, send a blank message to
        fundlaw-unsubscribe@....

        ------------------------------------------------------------------------
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      • Baker, John
        Hayley, My view is that, since messages posted to FundLaw are archived and viewable by all, they are on the record and may be quoted by anyone (except e-mail
        Message 3 of 3 , Mar 6 7:27 AM
        • 0 Attachment
          Hayley,

          My view is that, since messages posted to FundLaw are archived and
          viewable by all, they are on the record and may be quoted by anyone (except
          e-mail addresses, which are disguised by the archiving system). My position
          at Stradley Ronon is Of Counsel.

          If you have further questions, please feel free to call me or to
          contact me by e-mail at JBaker@....

          John M. Baker <JBaker@...>
          Stradley, Ronon, Stevens & Young, LLP
          2121 K Street, N.W., Suite 800, Washington, DC 20037
          (202) 261-3512 Fax (202) 261-3581
          FundLaw Listowner
          Http://www.egroups.com/group/fundlaw/info.html


          > -----Original Message-----
          > From: Hayley Green [SMTP:Hayley@...]
          > Sent: Monday, March 06, 2000 9:04 AM
          > To: fundlaw@egroups.com
          > Subject: [FundLaw] Re: SEC Releases Proposed Privacy Rules
          >
          > Dear John,
          >
          > I was following the Gramm-Leach-Bliley Act put forth by the Fed in
          > MFWire.com last month.
          > I was wondering if you would mind if I followed up that article with the
          > information below attributing it to you.
          > Would you also be able to supply me with your title (is it "of counsel"?)
          > and any opinions you may have.
          > If you would like I can be reached at 212-736-6935.
          >
          > Thanks,
          > Hayley Green
          >
          >
          > -----Original Message-----
          > From: Baker, John [mailto:JBaker@...]
          > Sent: Friday, March 03, 2000 10:15 PM
          > To: 'fundlaw@egroups.com'
          > Subject: [FundLaw] SEC Releases Proposed Privacy Rules
          >
          >
          > The SEC yesterday released its draft of the Gramm-Leach-Bliley Act
          > consumer privacy rules, which it calls Regulation S-P. The release was
          > posted late this afternoon on the SEC's web site at
          >
          > http://www.sec.gov/rules/proposed/34-42484.htm
          >
          > The SEC draft is generally similar to the banking agencies' proposal
          > but tailored to the securities industry, especially in the examples. The
          > rules would apply to all broker-dealers, all investment companies, and all
          > SEC-registered investment advisers, and would protect nonpublic personal
          > information about individuals who obtain financial products or services
          > for
          > personal, family, or household purposes. Essentially following the
          > banking
          > agencies' Alternative B (see prior message below), nonpublic personal
          > information would not include information that you reasonably believe is
          > lawfully made available to the general public from public sources.
          > However,
          > the SEC also invites comment whether the more stringent Alternative A
          > should
          > apply.
          >
          > The definitions of "consumer" and "customer" are particularly
          > finely-tuned. A consumer is an individual who obtains or has obtained a
          > financial product or service from you that is to be used primarily for
          > personal, family, or household purposes (and that individual's legal
          > representative). An individual who provides nonpublic personal
          > information
          > when seeking to obtain brokerage or advisory services is a consumer, even
          > if
          > no brokerage or advisory relationship is established. However, an
          > individual who provides you with name, address, and areas of investment
          > interest in requesting a prospectus or brochure is not a consumer. An
          > individual is not a consumer when the individual purchases an interest in
          > your investment company shares only through a broker or investment adviser
          > who is the record owner of those shares.
          >
          > A customer is a consumer who has a customer relationship with you.
          > A consumer who opens an account with an introducing broker is a customer
          > of
          > both the introducing broker and the clearing broker, and a customer who
          > purchases investment company shares in his or her own name through a
          > broker
          > or investment adviser is a customer of both the investment company and the
          > broker or investment adviser. A customer relationship will exist if you
          > hold securities or other assets as collateral for a third-party's loan to
          > the consumer (even if you do not effect any transactions on behalf of the
          > consumer), or if you regularly effect or engage in securities transactions
          > with or for a consumer (even if you do not hold any assets of the
          > consumer).
          > However, a consumer who does not establish an account with you does not
          > have
          > a continuing relationship with you if you provide brokerage services to
          > the
          > consumer on a one-time basis as an accommodation or to liquidate
          > securities
          > without the expectation of engaging in other transactions.
          >
          > Comments on the proposal are due March 31, 2000, and the rules are
          > proposed to go into effect November 13, 2000. The federal banking
          > agencies,
          > National Credit Union Administration, and Federal Trade Commission have
          > already made their privacy rule proposals. The easiest way to get copies
          > of
          > these is to go to the Federal Register web site at
          >
          > http://www.access.gpo.gov/su_docs/aces/aces140.html
          >
          > and search for "Gramm-Leach-Bliley".
          >
          >
          > John M. Baker <JBaker@...>
          > Stradley, Ronon, Stevens & Young, LLP
          > 2121 K Street, N.W., Suite 800, Washington, DC 20037
          > (202) 261-3512 Fax (202) 261-3581
          > FundLaw Listowner
          > Http://www.egroups.com/group/fundlaw/info.html
          >
          >
          > > -----Original Message-----
          > > From: Baker, John
          > > Sent: Thursday, February 03, 2000 11:22 AM
          > > To: 'fundlaw@egroups.com'
          > > Subject: Gramm-Leach-Bliley Privacy Proposal
          > >
          > > The Federal banking agencies today released their proposed consumer
          > > privacy rules under the Gramm-Leach-Bliley Act. The OCC has posted the
          > > joint notice of proposed rulemaking in PDF format on its web site at
          > >
          > > http://www.occ.treas.gov/ftp/regs/npr0203.pdf
          > >
          > > The rules are required to be promulgated in final form by May 12,
          > > 2000, and to be effective by November 12, 2000, except to the extent the
          > > rules provide for a later effective date; the proposal actually provides
          > > for effectiveness on November 13, 2000. According to today's American
          > > Banker (online access free today only from
          > > http://www.americanbanker.com/), Senate Finance Committee Chairman Phil
          > > Gramm says he will block any further privacy restrictions this year, as
          > he
          > > wants to see the effect of the new rules.
          > >
          > > The SEC and FTC have not yet posted their rule proposals, but they
          > > are expected to be similar. The proposal includes the following:
          > >
          > > The financial institution must give all "customers," initially and
          > > annually thereafter, a notice of the institution's privacy policy, but
          > > need give "consumers" the notice only if the institution intends to
          > > disclose their nonpublic personal information. Someone who provides
          > > nonpublic personal information to the institution to induce it to enter
          > > into a relationship is a consumer, even if the institution chooses not
          > to
          > > enter into the relationship. A one-time purchase of an insurance policy
          > > (a product with a continuing nature) would be sufficient to establish a
          > > customer relationship, while using an ATM or purchasing a money order
          > > would not.
          > >
          > > There are two alternative definitions of "nonpublic personal
          > > information." Under both definitions, the existence of the customer
          > > relationship and customers' addresses and telephone numbers are
          > > protected. Under Alternative A, information would lose its nonpublic
          > > character if the institution actually derived it from a public source
          > > (e.g., a telephone book or government real estate records); under
          > > Alternative B, the institution could freely disclose the information if
          > it
          > > were merely available from a public source.
          > >
          > > The required privacy notice may be in writing or, if the customer
          > > agrees, delivered electronically. Oral notices alone are insufficient.
          > > Electronic delivery should be by e-mail (to a consumer who obtains a
          > > financial product or service electronically) or on a web page that the
          > > consumer is required to acknowledge to obtain the product or service in
          > > question. If the consumer enters into a contract on the telephone, the
          > > institution may provide the consumer with the option of receiving the
          > > initial notice after providing the product or service so as not to delay
          > > the transaction. If the customer does not have a choice as to the
          > > institution (e.g., when the institution purchases the customer's loan in
          > > the secondary market), the acquiring institution may provide the initial
          > > notice within a reasonable time thereafter.
          > >
          > > A consumer must have a reasonable opportunity to opt out from
          > > information-sharing. A consumer can always opt out, even after the
          > > initial notice period, and the institution must comply with the
          > direction
          > > as soon as reasonably practicable. A financial institution may, but is
          > > not required to, provide a partial opt-out option.
          > >
          > > John M. Baker <JBaker@...>
          > > Stradley, Ronon, Stevens & Young, LLP
          > > 2121 K Street, N.W., Suite 800, Washington, DC 20037
          > > (202) 261-3512 Fax (202) 261-3581
          > > FundLaw Listowner
          > > Http://www.egroups.com/group/fundlaw/info.html
          > >
          >
          > ------------------------------------------------------------------------
          > This message was posted to the FundLaw list. It is not legal advice and
          > does not create an attorney-client relationship. To Post a message, send
          > it
          > to fundlaw@.... To Unsubscribe, send a blank message to
          > fundlaw-unsubscribe@....
          >
          > ------------------------------------------------------------------------
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          > -- http://www.egroups.com/vote?listname=fundlaw&m=1
          >
          >
          >
          > ------------------------------------------------------------------------
          > This message was posted to the FundLaw list. It is not legal advice and
          > does not create an attorney-client relationship. To Post a message, send
          > it to fundlaw@.... To Unsubscribe, send a blank message to
          > fundlaw-unsubscribe@....
          >
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