Read More →
New financial disclosure law may encompass some firms July 15, 2001 Regular News New financial disclosure law may encompass some firmsThe Florida Bar has posted information in the What’s New section of its website about a federal law that could affect some law firms by defining them as financial institutions if they are “significantly engaged in financial activities” with clients. Although little noticed by the legal community when it passed in 1999, the Financial Industries Modernization Act, commonly called the Gramm-Leach-Bliley Act, attracted growing attention by law firms as its July 1, 2001, effective date approached. The ABA has taken a position that the act, which is intended to enhance consumer private protections and requires that notices be given to clients, should not be interpreted as applying to law firms which are already bound by ethics rules on client confidentiality. According to the ABA, financial institutions are defined under the act as entities involved in: leasing real or personal property or advising in such leases; debt collection; financial advisory activities, including management consulting or counseling activities; and tax planning, preparation, and advising. In an article in its magazine, Attorneys’ Title Insurance Fund, Inc., Vice President and Associate General Counsel Louis B. Guttmann said the law applies to The Fund and its agents, including lawyers. “The GLBA has taken consumer concerns and turned them into legal requirements for institutions that collect nonpublic personal financial information, as defined by the law,” Guttmann wrote. “The financial institutions covered by the act are broadly defined and include many retailers, health care companies, travel agents, and other firms not traditionally considered financial institutions, as well as banks, thrifts, insurance companies, and securities firms.” The ABA advisory states: “Congress’ intent in passing this act is clear. This act is to prevent the indiscriminate use of personally identifiable information for marketing, profiling, and other commercial purposes.” The organization added while it supports that goal, the act will not improve on protections consumers already have from their lawyers. Among the requirements of the act, according to Guttmann, are a privacy notice disclosure, that customers be provided the opportunity to opt out of information that might be disclosed to others [The Fund noted that does not apply to its operations], and that measures be instituted to protect nonpublic information. Guttmann said the fund has adopted the following disclosure language: “We do not disclose any nonpublic personal information about our customers to anyone for any purpose that is not specifically permitted by law.” The ABA advisory, as well as the article from The Fund, are available on the Bar’s website at www.FLABAR.org. Look under What’s New on the home page. The ABA also recommends an article written by its Tax Section, available at http://www.abanet.org/tax/glbnote.html and provides two sample notices for law firms at http://www.abanet.org/cle/programs/tftcmo.html. Links to both are on the Bar’s website, as well as to other sources of information, including the text of the bill.