REGULATORY UPDATE

1
REGULATORY UPDATE

• Regulation S-P
• Cost Basis Reporting
• SAS 70

2
Regulation S-P

• Designed to Prevent Security Breaches and Misuse
  of Financial Info
• TA Amendments Effective 11/08
• STA Response

3
Objectives

• Ensures Sensitive Info Is Protected and Disposed
  of Properly
• Ensures Policies Are Reviewed Regularly
• Covers All SEC-Regulated Institutions

4
Requirements

• Transfer Agents Must
• Safeguard Sensitive Personal Information
• Guard Against Anticipated Threats (Red Flags)
• Designate A Program Officer and Document A
  Security Plan
• Test and Record Results
• Oversee Service Providers

5
Violations

• Plan Must Include How to Respond
• Assess
• Contain
• Investigate
• Notify

6
Cost Basis Reporting

• Pending legislation that will require
  Government Filers to include cost basis on
  1099Bs

7
Not So Simple!

• Sale Versus Transfer
• Identified Cost Versus FIFO
• Transaction Date
• Certificate Date
• DRIP Sales
• Wash Sales
• Corporate Actions
• 45-day Reporting Lag
• Passing Info To/From Brokers
• Transfers Received From Investors

8
SAS 70 Audit

• Definitive Means By Which A Service Provider Can
  Attest To The Effectiveness of Its Control
  Structure
• Done In Conjunction With A Third Party
• Type I or Type II
• Not Required For TAs But Demand Is Growing
• Readiness Assessment
• Audit Review

9

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