Q: I’m a
A: Regulation SP requires that financial institutions that provide nonpublic client information to unaffiliated third parties must notify the client of the information-sharing arrangement and give the client an opportunity to opt out. Reg SP provides numerous exemptions from the notice and opt out requirements, however. In this case, Section 14(a) is one such exemption that could apply. It exempts financial institutions from the initial notice and opt out if the information disclosed is “necessary to effect, administer or enforce a transaction requested or authorized by the client, or in connection with processing or servicing a financial product or service requested or authorized by the client.”
The phrase “necessary to effect, administer, or enforce a transaction” means that the disclosure is “required, or is a usual, appropriate, or acceptable method to carry out the transaction or the product … and record, service or maintain the consumer's account in the ordinary course of providing the financial service or financial product.” One could argue that, because the reps are dually registered, it’s necessary for them to provide you with client information in order for them to service the accounts. Another possible exemption might be Section 15, which exempts financial institutions from the initial notice and opt out in order to protect the confidentiality or security of records pertaining to the consumer, service, product or transaction, or to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability. The argument would be that the whole reason you’re required to supervise the activity of these reps at the RIA is to prevent wrongdoing on their part. Section 15 also provides an exemption to the extent specifically permitted or required under other provisions of law or of
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Q: My chief compliance officer said that if I text message my clients the firm has to retain copies of all the texts. I asked whether just texting that I’m running late to our meeting or texting a link to an article on our company’s webpage had to be retained, and he said they did. Doesn’t this seem a bit too much?
A: In Regulatory Notice 17-18 (Social Media and Digital Communications; April 2017),
