Use of issuer PII: Overview, definition, and example
What is the use of issuer PII?
The "use of issuer PII" refers to the handling and management of personally identifiable information (PII) related to the issuer of a financial instrument or product, such as a bond, stock, or other securities. Issuer PII includes data that can be used to identify an individual or entity involved in the issuance of securities or financial instruments, including contact details, financial records, and other sensitive information.
In the context of financial markets, "issuer" typically refers to the company or entity that is issuing securities, and PII refers to the personal information of individuals who are involved in the creation, management, or transaction of those securities. The use of this PII must comply with data protection laws and regulations to ensure that the information is properly safeguarded and used for legitimate business purposes.
Why is the use of issuer PII important?
The use of issuer PII is important because it involves the protection of sensitive information and compliance with data privacy regulations, such as the General Data Protection Regulation (GDPR) in the European Union or the California Consumer Privacy Act (CCPA) in the United States. Mishandling or unauthorized access to PII can result in legal consequences, fines, and damage to the issuer’s reputation.
Proper management of issuer PII ensures that personal information is used responsibly for purposes such as regulatory reporting, investor communication, and financial reporting. It also helps build trust with investors and stakeholders, knowing that their personal information is secure and being used appropriately.
Understanding the use of issuer PII through an example
Imagine a company, Company A, is issuing new shares of stock to raise capital. The company collects PII from investors, such as names, addresses, Social Security numbers (for U.S. investors), and financial information, to complete the registration and compliance process.
This PII is used by the company to:
- Verify the identity of investors.
- Report the transaction to regulatory authorities, such as the Securities and Exchange Commission (SEC).
- Communicate with investors about the offering, providing necessary disclosures, updates, and investor relations information.
To ensure compliance with data privacy laws, Company A must store and process this PII securely, ensure that it is only used for the intended purposes, and implement appropriate security measures to protect it from unauthorized access or breaches.
Example of a use of issuer PII clause
Here’s how a clause regarding the use of issuer PII might appear in a securities offering agreement:
“The Issuer agrees to collect, store, and process Personal Identifiable Information (PII) of investors in compliance with applicable data protection laws and regulations. Such information will be used solely for the purpose of processing the securities offering, regulatory compliance, and communication with investors. The Issuer will take all necessary steps to ensure the security and confidentiality of PII and will not disclose such information to third parties without the prior consent of the investors, except as required by law.”
Conclusion
The use of issuer PII is a crucial aspect of managing financial instruments and securities offerings, requiring careful handling to ensure compliance with data protection laws. Properly managing this sensitive information helps ensure trust between issuers and investors and protects both parties from potential legal and financial risks.
For businesses involved in issuing securities or financial products, it’s essential to understand the legal requirements around the use of issuer PII, implement strong data protection measures, and be transparent about how personal data is used and safeguarded. This not only helps comply with regulations but also promotes confidence among investors.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.