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April 21, 2014

SEC and Commodity Futures Trading Commission (CFTC) Adopt Joint Rules to Help Protect Investors from Identity Theft

The Securities and Exchange Commission, jointly with the Commodity Futures Trading Commission, adopted rules and guidelines to require certain entities regulated by the SEC and CFTC, such as broker-dealers, mutual funds and investment advisers, to establish and implement a written identity theft program. The SEC and CFTC adopted the rules in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The rules require that the written identity theft program be designed to detect, prevent and mitigate identity theft in connection with certain existing accounts or the opening of new accounts. The program should include policies and procedures designed to: (i) identify relevant types of identity-theft red flags; (ii) detect the occurrence of those red flags; (iii) respond appropriately to the detected red flags; and (iv) periodically update the identity theft program. The rules require entities to provide such things as staff training and oversight of service providers. The rules include guidelines and examples of red flags to help firms develop and administer programs that would satisfy the requirements of the rules.

The final rules will become effective 30 days after publication in the Federal Register. The compliance date for the final rules will be six months after the effective date.

Click here to read the final rules.

©2014 Katten Muchin Rosenman LLP

About the Author

Ross Pazzol, Financial Institutions Attorney, Katten Muchin Law firm
Partner

Ross Pazzol’s practice encompasses a broad range of financial services matters. He focuses primarily on the regulation of broker-dealers, futures commission merchants, investment companies and hedge funds, clearinghouses and investment advisers.

312-902-5554

About the Author

Avi Badash, Katten Muchin Law firm, finance attorney
Associate

Avi Badash concentrates his practice in financial services matters.

Prior to joining the firm, Avi was an Associate Director at the Financial Industry Regulatory Authority (FINRA), where he was involved in securities arbitration matters among broker-dealers and between broker-dealers and their customers or registered representatives.

While in law school, Avi was a member of the Cardozo Securities Arbitration Clinic.

212-940-7054

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