On November 20, 2013 all FCMs, CPOs, Broker Dealers, CTAs, and certain Investment Advisers must comply with new regulations put in place by the SEC and CFTC requiring reasonable policies and procedures to address the risk of identity theft. The following must be included in the procedures:
- Describe relevant “red flag” situations that could indicate risk of identity theft.
- Detect red flags as they arise.
- Respond to potential “red flags” appropriately.
- Update the program periodically.
These “red flags” apply to all “covered accounts” which include brokerage accounts with a Broker-Dealer as well as margin accounts.
We recommend you discuss this new requirement with a compliance consultant or legal counsel as soon as possible.