[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4479 Introduced in House (IH)]







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 investment 
   advisers to protect the confidentiality of financial information 
      obtained concerning their customers, and for other purposes.

    Be it enacted by the Senate and House of Representatives 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 CUSTOMERS 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 financial 
                information of, and relating to, their customers;
                    ``(B) to inform their customers whenever--
                            ``(i) financial information is being 
                        collected that pertains to such customers; or
                            ``(ii) a member intends (with the approval 
                        of the customer pursuant to subparagraph 
                        (C)(ii)) to offer financial information 
                        pertaining to such customer to any other 
                        person, including an affiliate or agent of such 
                        member; and
                    ``(C) to refrain, and to take measures reasonably 
                designed to prevent their agents, from using, 
                disclosing, or permitting access to individually 
                identifiable financial information pertaining to any 
                customer except--
                            ``(i) for the provision of the financial 
                        services from which such information is 
                        derived, or services necessary to, or used in, 
                        the provision of such services;
                            ``(ii) upon the affirmative written 
                        request, or with the affirmative written 
                        consent, of the customer to whom the 
                        information pertains; or
                            ``(iii) upon request of the Commission or 
                        as otherwise required by law.''.

SEC. 3. CONFIDENTIAL FINANCIAL INFORMATION OF SHAREHOLDERS OF 
              INVESTMENT COMPANIES.

    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 company--
            ``(1) to protect the confidentiality of financial 
        information of, and relating to, the beneficial owners of the 
        outstanding securities of the investment company;
            ``(2) to inform a beneficial owner of the outstanding 
        securities of the investment company whenever--
                    ``(A) financial information is being collected that 
                pertains to such beneficial owner; or
                    ``(B) the investment company intends (with the 
                approval of the beneficial owner pursuant to paragraph 
                (3)(B)) to offer financial information 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 reasonably designed 
        to prevent their agents, from using, disclosing, or permitting 
        access to individually identifiable financial information 
        pertaining to any such beneficial owner except--
                    ``(A) for the provision of the financial services 
                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 pertains; or
                    ``(C) upon request of the Commission or as 
                otherwise required by law.''.

SEC. 4. CONFIDENTIAL FINANCIAL INFORMATION OF CLIENTS 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 adviser--
            ``(1) to protect the confidentiality of financial 
        information of, and relating to, the clients of the investment 
        adviser;
            ``(2) to inform a client of the investment adviser 
        whenever--
                    ``(A) financial information is being collected that 
                pertains to such client; or
                    ``(B) the investment adviser intends (with the 
                approval of the client pursuant to paragraph (3)(B)) to 
                offer financial information pertaining to such client 
                to any other person, including an affiliate or agent of 
                such investment adviser; and
            ``(3) to refrain, and to take measures reasonably designed 
        to prevent their agents, from using, disclosing, or permitting 
        access to individually identifiable financial information 
        pertaining to any such client except--
                    ``(A) for the provision of the financial services 
                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.''.
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