SEC and CFTC Propose Joint Red Flag Rules and Guidelines to Protect Against Identity Theft | Practical Law

SEC and CFTC Propose Joint Red Flag Rules and Guidelines to Protect Against Identity Theft | Practical Law

On February 28, 2012, the SEC and CFTC issued a joint red flag rule and guideline proposal to protect investors from identity theft by requiring mutual funds, broker-dealers and other SEC-regulated entities to develop and implement programs that identify and detect identity theft red flags and outline appropriate responses. The proposed rules implement portions of the Dodd-Frank Act.

SEC and CFTC Propose Joint Red Flag Rules and Guidelines to Protect Against Identity Theft

by PLC Intellectual Property & Technology and PLC Corporate & Securities
Published on 29 Feb 2012 • USA (National/Federal)
On February 28, 2012, the SEC and CFTC issued a joint red flag rule and guideline proposal to protect investors from identity theft by requiring mutual funds, broker-dealers and other SEC-regulated entities to develop and implement programs that identify and detect identity theft red flags and outline appropriate responses. The proposed rules implement portions of the Dodd-Frank Act.
On February 28, 2012, the SEC and CFTC issued a joint rule and guideline proposal to protect investors from identity theft by requiring mutual funds, broker-dealers and other SEC-regulated entities to create programs that identify and detect identity theft red flags and outline appropriate responses. The rules and guidelines implement Title X of the Dodd-Frank Act.
The rules would require affected entities to have a written identity theft program that implements policies and procedures to:
  • Identify potential red flags.
  • Detect the occurrence of red flags.
  • Respond appropriately to the detected red flags.
  • Maintain and update the program.
The proposed rules are designed to help companies implement identity theft prevention programs by providing guidelines and examples of red flags. They do not contain new requirements not already provided in the final rules and guidelines jointly adopted in 2007 by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, and the Federal Trade Commission (Joint Agency Final Rules). In addition, the rules proposed by the SEC and CFTC do not expand the scope of the Joint Agency Final Rules to include new entities that were not already previously covered by the Joint Agency Final Rules.
The SEC and CFTC are accepting comments through May 7, 2012 and expect to make the rules and guidelines effective 30 days after publication of the final rules in the Federal Register.