11/6/2009
Shane B. Hansen
The Securities and Exchange Commission has announced that it is extending the compliance deadline for Regulation S-AM, Limitations on Affiliate Marketing, to June 1, 2010.
Unlike Regulation S-P, the new Regulation S-AM does not limit a firm's ability to share information, but rather limits the ability of a firm or its affiliate to use "eligibility information" for a marketing solicitation. Eligibility information includes information that would constitute a "consumer report" without regard to certain exclusions under Section 603(d)(2)(A) of the Fair Credit Reporting Act. Eligibility information does not include aggregate or blind data that does not contain personal identifiers such as account numbers, names, or addresses.
Regulation S-AM limits the use of eligibility information received from or provided to an affiliate of a broker-dealer, investment adviser, or other covered person for a marketing solicitation unless:
(1) the consumer (including customers and clients) has been given a clear and conspicuous notice of the intended use of their information (such as in the firm's privacy notice); and
(2) a reasonable opportunity, and a reasonable and simple method, to opt out of such solicitations (such as the method used for privacy notice opt-outs).
The effective date for Regulation S-AM was September 10, 2009, but the compliance deadline has now been extended by the SEC from January 1, 2010 to June 1, 2010, allowing firms and their affiliates more time to implement the new requirements.
Firms and their affiliates should carefully review the various definitions contained in the new rule to assess how it may apply to their marketing activities. Click here to get a copy of the SEC's Small Entity Compliance Guide explaining Regulation S-AM. Please do not hesitate to contact us if you have any questions or we can be of any assistance in your preparations for the new rule's requirements.
