The Securities and Exchange Commission announced a joint proposal with the Commodity Futures Trading Commission on Tuesday that requires mutual fund, commodities and securities brokers to design programs intended to protect investors from identity theft.
Under the Dodd-Frank Act, sections of the Fair Credit Reporting Act were amended and transferred from the Federal Trade Commission to become applicable to SEC- and CFTC-regulated entities.
The new rule proposal would require that certain financial institutions regulated by the commissions develop identity theft programs to detect and respond to red flags. The commissions are also considering guidelines to assist the institutions in the “formulation and maintenance of a program that would satisfy the requirements of the proposed rules.”
According to David Torok, the head of FTC planning and communications, identity theft “has been [the FTC's] number one complaint generator for the past five years, and that seems to be consistent,” accounting for 15 percent of complaints, Reuters reports.
The identity theft proposal is similar to rules adopted by the FTC and other regulators in 2007. Before issuing the proposed rules, the SEC and CFTC voted privately to seek public comment on the mandate. The rule will be open for a 60 day comment period ending on May 7.