Document ID: SEC-2009-1588-0001
Agency: sec
Document Type: Rule
Title: Regulation S-AM: Limitations on Affiliate Marketing; Extension of Compliance Date
Posted Date: 2009-11-12T05:00Z

[Federal Register: November 12, 2009 (Volume 74, Number 217)]
[Rules and Regulations]               
[Page 58204-58205]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12no09-6]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 248

[Release Nos. 34-60946; IA-2946; IC-28990; File No. S7-29-04]
RIN 3235-AJ24

 
Regulation S-AM: Limitations on Affiliate Marketing; Extension of 
Compliance Date

AGENCY: Securities and Exchange Commission.

ACTION: Final rule; extension of compliance date.

-----------------------------------------------------------------------

SUMMARY: The Securities and Exchange Commission is extending the 
compliance date for Regulation S-AM (74 FR 40398 (Aug. 11, 2009)), 
which limits a person's use of certain information received from an 
affiliate to solicit a consumer for marketing purposes unless the 
consumer has been given notice and a reasonable opportunity and a 
reasonable and simple method to opt out of such solicitations.

DATES: The effective date for Regulation S-AM (17 CFR 248.101 through 
248.128) remains September 10, 2009. The compliance date for Regulation 
S-AM is extended from January 1, 2010 to June 1, 2010.

FOR FURTHER INFORMATION CONTACT: For information regarding the 
regulation as it relates to brokers, dealers, or transfer agents, 
contact Brice Prince, Special Counsel, or Ignacio Sandoval, Attorney, 
Office of Chief Counsel, Division of Trading and Markets, (202) 551-
5550, or regarding the regulation as it relates to investment companies 
or investment advisers, contact Penelope Saltzman, Assistant Director, 
or Thoreau Bartmann, Senior Counsel, Office of Regulatory Policy, 
Division of Investment Management, (202) 551-6792, Securities and 
Exchange Commission, 100 F Street, NE., Washington, DC 20549.

SUPPLEMENTARY INFORMATION: On August 9, 2009, the Commission adopted 
Regulation S-AM to implement Section 624 of the Fair Credit Reporting 
Act, as amended by Section 214 of the Fair and Accurate Credit 
Transactions Act of 2003 (``FACT Act'').\1\ Section 624 required the 
Commission and other federal agencies to adopt rules implementing 
limitations on a person's use of certain information received from an 
affiliate to solicit a consumer for marketing purposes, unless the 
consumer has been given notice and a reasonable opportunity and a 
reasonable and simple method to opt out of such solicitations. 
Regulation S-AM implements the requirements of Section 624 with respect 
to investment advisers and transfer agents registered with the 
Commission, as well as brokers, dealers, and investment companies 
(collectively ``Covered Persons''). The release adopting Regulation S-
AM established an effective date of September 10, 2009, and a 
compliance date of January 1, 2010.\2\
---------------------------------------------------------------------------

    \1\ Regulation S-AM: Limitations on Affiliate Marketing, 
Securities Exchange Act Release No. 60423 (Aug. 9, 2009) [74 FR 
40398 (Aug. 11, 2009)].
    \2\ Id.
---------------------------------------------------------------------------

    Two associations representing institutions that are subject to 
Regulation S-AM have expressed, on behalf of their members, concerns 
regarding the difficulties that their members are facing in complying 
with the regulation.\3\ Specifically, the associations assert that the 
period for compliance does not provide enough time to design, implement 
and test the system changes that will be necessary to accommodate, 
monitor and maintain opt out requests.
---------------------------------------------------------------------------

    \3\ See Comment Letters from the Investment Adviser Association 
(Sept. 24, 2009) and the Investment Company Institute (Sept. 8, 
2009). The comment letters are available for public inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE, 
Washington, DC 20549 on official business days between the hours of 
10 a.m. and 3 p.m. (File No. S7-29-04), and also are available on 
the Commission's Internet Web site: http://www.sec.gov/rules/
proposed/s72904.shtml).
---------------------------------------------------------------------------

    While we have some concerns about the effect of an extension in 
delaying the anticipated benefits of the regulation, the Commission is 
persuaded that a limited extension of the compliance date for 
Regulation S-AM is appropriate. Our judgment is based on the 
representations made by the associations (whose members are required to 
comply with the regulation and thus are in a position to assess the 
level of difficulty and time involved in such compliance) and our 
experience in overseeing the industry. We also believe that the 
additional period for compliance would allow more Covered Persons to 
combine or coordinate notices required under Regulation S-AM with 
privacy notices required under the Gramm-Leach-Bliley Act and 
Regulation S-P, which is specifically permitted under Section 624 of 
the FCRA Act.\4\ Accordingly, the Commission believes it is appropriate 
to extend the compliance date for Regulation S-AM to June 1, 2010. The

[[Page 58205]]

regulation's effective date of September 10, 2009 remains unchanged.
---------------------------------------------------------------------------

    \4\ See 15 U.S.C. 1681s-3(b). See also 15 U.S.C. 6801-6809 
(Gramm-Leach-Bliley Act privacy provisions); 17 CFR Part 248 
(Regulation S-P).
---------------------------------------------------------------------------

    The Commission finds that, for good cause and the reasons cited 
above, including the brief length of the extension we are granting, 
notice and solicitation of comment regarding the extension of the 
compliance date for Regulation S-AM are impracticable, unnecessary, or 
contrary to the public interest.\5\ In this regard, the Commission also 
notes that Covered Persons need to be informed as soon as possible of 
the extension and its length in order to plan and adjust their 
implementation process accordingly.
---------------------------------------------------------------------------

    \5\ See Section 553(b)(3)(B) of the Administrative Procedure Act 
(5 U.S.C. 553(b)(3)(B)) (``APA'') (an agency may dispense with prior 
notice and comment when it finds, for good cause, that notice and 
comment are ``impracticable, unnecessary, or contrary to the public 
interest). The change to the compliance date is effective upon 
publication in the Federal Register. This date is less than 30 days 
after publication in the Federal Register, in accordance with the 
APA, which allows effectiveness in less than 30 days after 
publication for ``a substantive rule which grants or recognizes an 
exemption or relieves a restriction.'' See 5 U.S.C. 553(d)(1).
---------------------------------------------------------------------------

    By the Commission.

    Dated: November 5, 2009.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-27126 Filed 11-10-09; 8:45 am]

BILLING CODE 8011-01-P