US regulators propose rules to protect against identity theft


Tue Feb 28, 2012 2:35pm EST

* SEC, CFTC propose identity theft protection rule

* Rule is required by the Dodd-Frank law

* Firms would need to develop programs to protect investors

* Proposed rule not considered controversial

By Sarah N. Lynch

WASHINGTON, Feb 28 (Reuters) – New rules proposed by
federal market regulators on Tuesday would require mutual funds
and securities and commodities brokerages to develop programs to
protect investors against identity theft.

The proposal, issued jointly by the U.S. Securities and
Exchange Commission and Commodity Futures Trading Commission,
stems from a requirement in the 2010 Dodd-Frank Wall Street
overhaul law.

That provision in the law transferred some authority over
certain parts of the Fair Credit Reporting Act from the Federal
Trade Commission to the SEC and CFTC. The Fair Credit Reporting
law sets standards for the collection, communication, and use of
information about consumers by consumer reporting agencies.

The SEC and CFTC’s proposal would require certain firms they
regulate to come up with a written identity theft program with
certain policies and procedures. Under that program, financial
firms would need to identify and detect red flags, respond to
them and update the program as needed.

The proposal is similar to rules that were already adopted
by the FTC and several other federal financial regulators in
2007.

The SEC and CFTC issued the proposed rules after
commissioners at each agency voted behind closed doors to seek
public comments on the plan.

The identity-theft provision in Dodd-Frank has not been
considered controversial, and has not received widespread media
attention.

Article source: http://www.reuters.com/article/2012/02/28/financial-regulation-identitytheft-idUSL2E8DSA3D20120228

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