First Reg S-P Fines Highlight How Seriously The SEC Is Taking The Confidentiality Of Client Data

Thursday, April 07, 2011 22:46
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First Reg S-P Fines Highlight How Seriously The SEC Is Taking The Confidentiality Of Client Data

In a landmark settlement against a defunct Florida firm, the SEC has effectively served notice to the industry that the rules surrounding client data are strict and will be enforced under all circumstances.

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Tampa brokerage firm GunnAllen Financial already had a track record of failures to protect client information.

 

Several computers were stolen and at least one fired employee managed to steal email passwords.

 

But the last straw was giving its departing national sales manager a thumb drive with information on the firm's 16,000 accounts when he left.

 

It's true that the firm was winding down anyway, another casualty of the private placement boom.

 

But by not alerting the clients to the fact that their information was being transferred -- or giving them a chance to opt out -- management ran afoul of Regulation S-P, the SEC says.

 

The individuals named in the action have to pay fines of $15,000 to $20,000. 

 

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