On November 17, 2009, eight federal regulatory agencies, including the Securities and Exchange Commission (SEC), released a new model privacy form (for the SEC, Model Form S-P), that can be used by financial institutions to comply with the notice requirements of the Gramm-Leach-Bliley Act (the GLB Act). Under the GLB Act, financial institutions are required to notify consumers of their practices relating to the collection and sharing of nonpublic personal information and to inform consumers of their right to opt out of certain information sharing practices. The new model privacy form is intended to make it easier for consumers to understand how financial institutions collect and share nonpublic personal information.
The adoption of the new model privacy form is a result of the enactment of the Financial Services Regulatory Relief Act of 2006, which amended the GLB Act to require the federal regulatory agencies to jointly develop a model privacy notice that (1) is comprehensible to consumers, with a clear format and design; (2) provides for clear and conspicuous disclosures; (3) enables consumers easily to identify the information sharing practices of a financial institution and to compare privacy practices among financial institutions; and (4) is succinct and uses an easily readable type font. The new model privacy form, which utilizes a two-page standardized format, provides a safe harbor for compliance with the privacy notice requirements of the GLB Act and related privacy rules (for the SEC, Regulation S-P) and will also satisfy the notification requirements under Regulation S-AM (the SEC’s affiliate marketing rules under the Fair and Accurate Credit Transactions Act of 2003). No additional information, other than what is specifically permitted, may be included in the new model privacy form in order to obtain the benefit of the safe harbor. Use of the new model privacy form is voluntary.
In conjunction with the release of the new model privacy form, the federal regulatory agencies (other than the SEC) are eliminating the safe harbor permitted for privacy notices based on the Sample Clauses currently contained in the agencies’ privacy rules for notices delivered on or after December 31, 2010. Likewise, the SEC is eliminating the guidance associated with the use of privacy notices based on the Sample Clauses in Regulation S-P for notices delivered after December 31, 2010.
The new model privacy form will be available for use 30 days after its publication in the Federal Register.