Fraud


The SEC adopted rules jointly with the Commodity Futures Trading Commission (CFTC) that require broker-dealers, mutual funds, investment advisers, and certain other entities regulated by the SEC to adopt programs to prevent identity theft.

A unanimous decision by the SEC commissioners resulted in the adoption of the rule, known as Regulation S-ID.

The requirement expands rules initially enacted in 2007 by several federal agencies—but not the SEC. The Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203, transferred rulemaking and enforcement authority for identity theft rules to the SEC and the CFTC for the entities they regulate.

Therefore, many entities recognized as financial institutions or creditors subject to the new Regulation S-ID have already been complying with similar rules, SEC Commissioner Luis Aguilar said.

Registered investment advisers in particular, though, may not have existing identity theft red flag programs and may need to pay particular attention to the rules adopted Wednesday, Aguilar said.

The rules require broker-dealers, mutual funds, and investment advisers to adopt policies and procedures to:

  • Identify relevant types of identity theft red flags.
  • Detect the occurrence of those red flags.
  • Respond appropriately to the detected red flags.
  • Periodically update the identity theft program.


The rules, available at tinyurl.com/cane2zx, will take effect 30 days after publication in the Federal Register, and the compliance date will be six months after the rules’ effective date.

SPONSORED REPORT

Questions to ask before committing to the cloud

Cloud computing has its pros and cons. In this report, we answer common questions CPAs may have as they consider transitioning partially or fully to the cloud.

QUIZ

News quiz: IRS reopens an online service, but criticism endures

The IRS brings back the Get Transcript Online service, but the agency faces criticism for its handling of the aftermath of the event that led to the shutdown of the service. See how much you know about other recent news with this quiz.

CHECKLIST

Auditing risks in culture

Cultural flaws can seriously damage an organization. Here’s how internal auditors can reduce risks by embedding culture audits into existing audit programs.