Client Alert: Reminder to Send Annual Private Notices


Since 2001, the Privacy of Consumer Financial Information rule adopted by the Federal Trade Commission under the Gramm Leach Bliley Act has required all financial institutions (including private equity funds) to send annual notices to their investors who are individuals describing the fund's privacy policy, the categories of nonpublic personal information the fund intends to disclose, the categories of affiliates or third parties to which such disclosures will be made, and a method for the investor to "opt-out" of the disclosure of personal information to third parties. Private equity funds that do not disclose nonpublic information need not include the "opt-out" procedures. The notices should include the categories of nonpublic personal information that the private equity fund collects, a statement that the information is not disclosed, and a statement of the private equity fund's procedures for protecting the confidentiality of the information.

Each fund must distribute the annual notice to individual investors every twelve months. Usually, the fund must mail a hard copy of the notice to each investor. However, the fund may meet the distribution requirement by emailing the notice to an investor or by posting it on a fund website
[1] that the investor can access if the investor has specifically consented to receiving information electronically from the fund.

In practice, most private equity funds establish one privacy policy that covers all investors (i.e., individuals and institutions) and distribute it to institutional investors in connection with the required distribution to individual investors. Depending on your preference, Klehr can provide a form of policy to you that applies to all investors or just the individual investors (who are required to be notified). 

If you have any questions regarding complying with the Privacy of Consumer Financial Information rule or the form a notice should take, please call
Keith Kaplan at 215-569-4143 or Jon Katona at 215-569-4222.

[1]               The policy or a link to the policy must be posted on a webpage that investors access frequently.