By Keith W. Kaplan and Jason C. Menegakis

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, any nonpublic personal information the fund intends to disclose to affiliates or third parties, 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.

Since the initial notices under this rule were required to be sent by July 1, 2001, many funds need to send their annual notices by July 1, 2004. Funds that held their initial closing after July 1, 2003 may send their notices later, so long as they are sent within twelve months of the initial closing.

If you have any questions regarding complying with the Privacy of Consumer Financial Information rule, please call Keith Kaplan at 215-569-4143 or Jason Menegakis at 215-569-4516.