Individual Settles FINRA Charges for Violating NPI Privacy Safeguards
Commentary by Steven Lofchie
A former registered representative settled FINRA charges for removing and retaining nonpublic personal information of about 1,300 customers of the broker-dealer for which he had worked. The personal information included customer social security numbers, account numbers and dates of birth.
As a result, the individual caused the firm to violate Regulation S-P ("Privacy of Consumer Financial Information and Safeguarding Personal Information") which prohibits financial institutions from disclosing such information unless the customer receives proper notice and opportunity to opt out. In addition, FINRA found that the individual violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").
To settle the charges, the individual agreed to (i) a $5,000 fine and (ii) a 15-business-day suspension from associating with any FINRA member in all capacities.
Commentary
Oddly, most of the Regulation S-P enforcement actions involving broker-dealers have been brought, not against broker-dealers, but against employees who stole customer information.