Annual Privacy Notice Requirement Rule Change


On December 4, 2015, the Fixing America’s Surface Transportation Act (the FAST Act) became effective and, among other things, amended the Gramm-Leach-Bliley Act (GLBA). The FAST Act provides an exception to the annual privacy notice requirement for certain financial institutions meeting essentially just two conditions, both of which many broker/dealers and investment advisers already to meet. First, the firm must only share nonpublic personal information within the GLBA exceptions that do not have an opt-out right. These exceptions include, but are not limited to, sharing information with non-affiliated third parties for the purposes of performing services for or functions on behalf of the firm (e.g., crucial service providers like clearing firms, custodians, portfolio management systems). Second, the firm must not have changed its privacy policies or procedures with respect to the disclosures of nonpublic personal information since the last privacy notice was made to clients. If your firm meets both of these exceptions, then it no longer needs to send annual privacy notices unless there were changes to its privacy policies or in its disclosure practices for nonpublic personal information with third parties such that a consumer would have the right to opt-out.

Of course, the initial privacy notice requirement has not changed. If you’d like to discuss your particular circumstances to see whether your firm meets the conditions for the exception to the annual notice requirement, please feel free to contact me at 616-752-2526 or ddawe@wnj.com.