SIE practice questionmediumPrivacy Regulations
Under Regulation S-P (SEC privacy rule), broker-dealers must provide customers with a privacy notice that explains:
- AHow the firm collects, uses, and shares customers' personal financial information✓ Correct answer
- BUpcoming changes to commission schedules
- CThe firm's executive compensation packages
- DThe firm's trading strategies and proprietary information
Explanation
Why A — How the firm collects, uses, and shares customers' personal financial information
Regulation S-P requires broker-dealers and investment advisers to provide customers with a clear privacy notice describing what personal information is collected, how it is used, and with whom it is shared. Customers must be given the opportunity to opt out of having their information shared with non-affiliated third parties. The initial notice must be provided when the customer relationship is established, and annual notices are provided thereafter.
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