How Financial Institutions Should Strengthen Their Data Security to Comply With FTC’s Updated Safeguards Rule

The Federal Trade Commission (FTC) issued a final rule (Final Rule) amending the Standards for Safeguarding Customer Information, known as “the Safeguards Rule,” under the Gramm-Leach-Bliley Act. The Final Rule, which became effective on January 10, 2022 (Effective Date), requires non-banking financial institutions to develop, implement and maintain a comprehensive security system to keep their customers’ information safe. This article analyzes the Final Rule’s changes and offers practical steps fund managers can take to comply with the rule’s new requirements, some of which took effect on the Effective Date and others a year from then. For more on the FTC, see “In Third Point Settlement, FTC Takes Narrow View of ‘Investment Only’ Exemption to Hart-Scott-Rodino Premerger Notification Requirements” (Sep. 3, 2015).

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