I
105TH CONGRESS
2D SESSION
H. R. 4479
To require brokers, dealers, investment companies, and investment advisers
to protect the confidentiality of financial information obtained concerning
their customers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 6, 1998
Mr. MARKEY introduced the following bill; which was referred to the
Committee on Commerce
A BILL
To require brokers, dealers, investment companies, and in-
vestment advisers to protect the confidentiality of finan-
cial information obtained concerning their customers, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Securities Investors
Privacy Enhancement Act of 1998’’.
SEC. 2. CONFIDENTIAL FINANCIAL INFORMATION OF CUS-
TOMERS OF BROKERS AND DEALERS.
Section 15A(b) of the Securities Exchange Act of
1934 (15 U.S.C. 78o–3(b)) is amended by adding at the
end the following new paragraph:
‘‘(14) The rules of the association include rules
to require members of the association—
‘‘(A) to protect the confidentiality of finan-
cial information of, and relating to, their cus-
tomers;
‘‘(B) to inform their customers whenever—
‘‘(i) financial information is being col-
lected that pertains to such customers; or
‘‘(ii) a member intends (with the ap-
proval of the customer pursuant to sub-
paragraph (C)(ii)) to offer financial infor-
mation pertaining to such customer to any
other person, including an affiliate or
agent of such member; and
‘‘(C) to refrain, and to take measures rea-
sonably designed to prevent their agents, from
using, disclosing, or permitting access to indi-
vidually identifiable financial information per-
taining to any customer except—
‘‘(i) for the provision of the financial
services from which such information is de-
rived, or services necessary to, or used in,
the provision of such services;
‘‘(ii) upon the affirmative written re-
quest, or with the affirmative written con-
sent, of the customer to whom the infor-
mation pertains; or
‘‘(iii) upon request of the Commission
or as otherwise required by law.’’.
SEC. 
3. 
CONFIDENTIAL 
FINANCIAL 
INFORMATION 
OF
SHAREHOLDERS OF INVESTMENT COMPA-
NIES.
Section 38 of the Investment Company Act of 1940
(15 U.S.C. 80a–37) is amended by adding at the end the
following new subsection:
‘‘(d) PRIVACY OF FINANCIAL INFORMATION.—The
Commission, as it deems necessary or appropriate in the
public interest or for the protection of investors, shall
adopt rules or regulations to require any investment com-
pany—
‘‘(1) to protect the confidentiality of financial
information of, and relating to, the beneficial owners
of the outstanding securities of the investment com-
pany;
‘‘(2) to inform a beneficial owner of the out-
standing securities of the investment company when-
ever—
‘‘(A) financial information is being col-
lected that pertains to such beneficial owner; or
‘‘(B) the investment company intends
(with the approval of the beneficial owner pur-
suant to paragraph (3)(B)) to offer financial in-
formation pertaining to such beneficial owner to
any other person, including an affiliate or agent
of such investment company; and
‘‘(3) to refrain, and to take measures reason-
ably designed to prevent their agents, from using,
disclosing, or permitting access to individually iden-
tifiable financial information pertaining to any such
beneficial owner except—
‘‘(A) for the provision of the financial serv-
ices from which such information is derived, or
services necessary to, or used in, the provision
of such services;
‘‘(B) upon the affirmative written request,
or with the affirmative written consent, of the
beneficial owner to whom the information per-
tains; or
‘‘(C) upon request of the Commission or as
otherwise required by law.’’.
SEC. 4. CONFIDENTIAL FINANCIAL INFORMATION OF CLI-
ENTS OF INVESTMENT ADVISERS.
Section 211 of the Investment Advisers Act of 1940
(15 U.S.C. 80b–11) is amended by adding at the end the
following new subsection:
‘‘(e) PRIVACY OF FINANCIAL INFORMATION.—The
Commission, as it deems necessary or appropriate in the
public interest or for the protection of investors, shall
adopt rules or regulations to require any investment ad-
viser—
‘‘(1) to protect the confidentiality of financial
information of, and relating to, the clients of the in-
vestment adviser;
‘‘(2) to inform a client of the investment ad-
viser whenever—
‘‘(A) financial information is being col-
lected that pertains to such client; or
‘‘(B) the investment adviser intends (with
the approval of the client pursuant to para-
graph (3)(B)) to offer financial information
pertaining to such client to any other person,
including an affiliate or agent of such invest-
ment adviser; and
‘‘(3) to refrain, and to take measures reason-
ably designed to prevent their agents, from using,
disclosing, or permitting access to individually iden-
tifiable financial information pertaining to any such
client except—
‘‘(A) for the provision of the financial serv-
ices from which such information is derived, or
services necessary to, or used in, the provision
of such services;
‘‘(B) upon the affirmative written request,
or with the affirmative written consent, of the
client to whom the information pertains; or
‘‘(C) upon request of the Commission or as
otherwise required by law.’’.
Æ