Synopsis: On July 29, 2009, the Federal Trade Commission announced that it would postpone enforcement of its "Red Flags Rule" until November 1, 2009. The rule, which requires the development and implementation of written identity theft prevention programs by creditors and financial institutions, was promulgated pursuant to the Fair and Accurate Credit Transactions Act of 2003. The Red Flags Rule may require advisory firms and broker-dealers to strengthen their current privacy policies and implement effective identity theft programs. The Lowenstein Sandler Investment Management Group Client Alert issued January 6, 2009 analyzes the Red Flags Rule and its potential applicability to broker-dealers. The Federal Trade Commission has provided a website containing helpful resources relating to the Red Flags Rule. The website is available here.
Status: Enforcement of the Red Flags Rule will begin on November 1, 2009.