WASHINGTON — Responding to feedback on a Securities and Exchange Commission proposal involving protecting the privacy of a consumer's financial information, Desert Schools Financial Services cited its own pending lawsuit against a former financial adviser.
Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Personal Information addresses the protocol when a financial adviser leaves one brokerage firm for another and permitting client information to be given to that adviser's new broker-dealer.
In a May 12 letter to SEC, Becky Nilsen, CEO of Desert Schools Financial Services, a subsidiary of $3.1 billion Desert Schools FCU, wrote that Gramm-Leach Bliley Act binds financial institutions to protect personal information. The credit union has a pending lawsuit in the Superior Court of Arizona against a former financial adviser who sold a client list along with other nonpublic information "for personal gain" receiving a signing bonus in excess of $300,000, Nilsen wrote.
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"The action of this financial adviser caused investor confusion in that the members were unclear from the solicitation about where their accounts were actually held, most were outraged that such a situation could occur and these members definitely feel that their privacy was violated," Nilsen wrote.
NACUSO has spoken out against SEC's proposed changes saying without an opt-option being given to clients, the amendments may not be authorized by Gramm-Leach Bliley.
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