Quick Answer
Customer information must be protected from improper use and disclosure. A firm controls access when information moves between departments or outside parties. Information about securities ownership obtained while acting as a paying agent, transfer agent, trustee, or similar fiduciary cannot support the firm's own solicitation, except when the issuer requests and receives the solicitation on its behalf.
Confidentiality and Access Control
Customer information is confidential. The operational question is whether a person or party has an appropriate reason to receive it.
- A firm protects customer information from improper use and improper disclosure.
- It controls access when information moves from one department to another.
- It also controls access when information is shared with a party outside the firm.
Information flow -> access control -> protected customer information.
Think of it this way: Customer information is not a general firm resource. Each handoff requires a permitted purpose and controlled access.
Information Obtained in a Fiduciary Capacity
A member can obtain securities-ownership information while serving in a fiduciary role, such as a:
- Paying agent
- Transfer agent
- Trustee
- Similar fiduciary capacity
That information cannot be repurposed to solicit purchases, sales, or exchanges for the member's own benefit.
| Use of ownership information | Permitted? |
|---|---|
| Member uses fiduciary information for its own solicitation | No |
| Issuer requests solicitation and it is conducted on the issuer's behalf | Yes |
Exam Tip: Gotchas
- Fiduciary information cannot become the member's marketing list. The exception requires both an issuer request and solicitation on the issuer's behalf.
- A solicitation may be permitted for the issuer, but that does not authorize the member to use the information for its own purposes.
Memory Aid: Fiduciary information follows the issuer's purpose, not the member's sales purpose.