Regulation S-P, requires advisers to adopt policies and procedures reasonably designed to (a) ensure the confidentiality of client records and information; (b) protect against any anticipated threats or hazards to the security of client records and information; and (c) protect against unauthorized access or use of client records or information that could result in “substantial harm or inconvenience” to any client. The privacy provisions of Regulation S-P apply to information that is “nonpublic personal information.”
Nonpublic information, under Regulation S-P, includes “personally identifiable financial information” and any list, description, or grouping that is derived from personally identifiable financial information. Personally identifiable financial information is defined to include three categories of information:
- Information Supplied by Client. Any information that is provided by a client or prospective client to HCM in order to obtain a financial product or service. This would include information or material given to HCM when entering into an investment advisory agreement.
- Information Resulting from Transaction: Any information that results from a transaction with the client or any services performed for the client. This category would include information about account balances, securities positions, or financial products purchased or sold through a broker/dealer.
- Information Obtained in Providing Products or Services. Any information obtained by Herndon Capital Management LLC (“HCM”) from a consumer report or other outside source which is used by HCM to verify information that a client or prospective clients has given.
As a general policy, HCM will not disclose personal financial information about any client to third parties except as necessary to establish and manage the client’s account(s) or as required by law which includes any regulatory body such as the Securities and Exchange Commission (SEC). In these situations, personal financial information about a client may be provided to the broker/dealers executing trades in these accounts. The client or prospective client will acknowledge in writing that such information may be provided to the broker/dealer by HCM in establishing his/her advisory account. Other service providers where client information may be required to be disclosed include those for Proxy Voting, Order Management and Accounting Systems, Audit etc. The client will also acknowledge that disclosure of personal financial information to a third party, such as a broker/dealer or other service provider, may be withheld if the client or prospective client so requests. However, a client directing that HCM not provide personal financial information to third parties does not relieve HCM from obtaining such information from the client in order to establish an advisory account with HCM.
- Personal financial information about a client may be provided to the broker/dealers executing the trades for these accounts on HCM’s behalf.
- The client or prospective client will acknowledge in writing that such information may be provided to the broker/dealer by HCM in establishing his/her advisory account.
- The client will also acknowledge that disclosure of personal financial information to a third party, such as a broker/dealer or other service provider, may be withheld if the client or prospective client so requests.
- It is Firm policy to shred any discarded document with a client name or account number on it.