SEC Adopts Reg S-AM, Restricting Affiliate Marketing Based on Consumer Eligibility Info
The SEC has adopted Regulation S-AM, which prohibits SEC registrants from allowing a registrant’s affiliate to use certain consumer eligibility information obtained from the registrant’s customers to market its products. The Rule applies to investment companies, investment advisers, broker-dealers, and transfer agents. The type of information restricted is broadly defined to include personally identifiable eligibility information obtained as a result of the relationship with the registrant. Registrants may use such information after providing the consumer notice and a reasonable opportunity to opt out. Firms must comply by January 1, 2010.
OUR TAKE: The practical effect of the new Rule is to include the Regulation S-AM notice and opt-out in the Regulation S-P privacy notices (as permitted and encouraged by the SEC).