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ARTICLE · 16 DECEMBER 2022

SEC Releases Risk Alert Regarding Compliance Issues With Identity Theft Prevention Programs Under Regulation S-ID

Lowenstein Sandler LLP
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On December 5, 2022, the Division of Examinations (EXAMS) of the Securities and Exchange Commission (SEC) issued a Risk Alert regarding recently observed compliance issues with respect to Regulation S-ID.

United StatesCorporate/Commercial Law
Scott Moss
Scott Moss
Vincent R. Scala
Vincent R. Scala

On December 5, 2022, the Division of Examinations (EXAMS) of the Securities and Exchange Commission (SEC) issued a Risk Alert1 regarding recently observed compliance issues with respect to Regulation S-ID.2 Under Regulation S-ID, certain registered investment advisers, broker-dealers, and investment companies are required to develop and implement an identity theft prevention program. EXAMS noted four primary compliance issues related to identifying covered accounts, establishing an appropriate identity theft prevention program, implementing all required elements of a program, and administering a program.

Background

Regulation S-ID requires SEC-regulated entities that qualify as financial institutions or creditors under the Fair Credit Reporting Act to determine whether they offer or maintain covered accounts.3 The Regulation applies to certain registered investment advisers, broker-dealers, and investment companies. For example, Regulation S-ID applies to

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