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ARTICLE · 01 JUNE 2013

SEC And CFTC Adopt "Red Flag" Identity Theft Rules

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The SEC and the CFTC recently issued final rules requiring certain regulated entities that qualify as either "financial institutions" or "creditors" to adopt programs to identify and address the risk of identity theft (so-called "red flag rules").

United StatesFinance and Banking
Proskauer'S Private Investment Funds Practice Group
Proskauer'S Private Investment Funds Practice Group
Proskauer'S Hedge Fund Practice Group
Proskauer'S Hedge Fund Practice Group
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The SEC and the CFTC recently issued final rules requiring certain regulated entities that qualify as either "financial institutions" or "creditors" to adopt programs to identify and address the risk of identity theft (so-called "red flag rules"). The final rules went into effect on May 20, 2013, and all affected SEC- and CFTC-regulated entities are required to be in compliance with them by November 20, 2013. The following is a brief analysis of Regulation S-ID (the SEC's new red flag rules) and Subpart C (the CFTC's new red flag rules) and their potential impact on private fund advisers.

The red flag rules grew out of a regulatory initiative mandated by Congress in 2003 that required various Federal regulatory agencies (including the FTC, but not the SEC or the CFTC) to jointly issue regulations requiring the entities under their respective jurisdictions to adopt identity theft detection programs. Rules were adopted in accordance with this mandate in 2007, requiring

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