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SEC Imposes First Fines for Privacy Rule Violation

FINANCIAL PRIVACY—U.S.

April 8, 2011

The U.S. Securities and Exchange Commission has fined three individuals for violations of the Privacy Rule and Safeguards Rule of Regulation S-P. Last year, securities broker-dealer GunnAllen Financial, Inc., sent notice to account holders that it was liquidating and informed them of subsequent options regarding their accounts. A month later, a GunnAllen representative downloaded the accountholders' files to his personal thumb drive and took them to a new firm. The action violated the Privacy Rule, which allows customers to opt out of third-party disclosures, and the Safeguards Rule, which blocks transfers when customers are not given that choice. Two individuals were fined $20,000 and the third $15,000 for "aiding and abetting GunnAllen's rule violations," writes Andrew Smith in this Daily Dashboard exclusive.
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