November 14, 2019
DFS SUPERINTENDENT LINDA A. LACEWELL ANNOUNCES NEW MEASURES TO STREAMLINE DISCLOSURE PROCESSES FOR LEGAL COUNSEL AND INDEPENDENT AUDITORS
New Proposed Regulation Revises Existing Requirements and Allows Regulated Entities to Disclose Confidential Supervisory Information to Legal Counsel and Independent Auditors Without Obtaining Prior Written Approval from DFS
New York – Superintendent of Financial Services Linda A. Lacewell today announced new measures to streamline the procedures regarding disclosure of confidential supervisory information to legal counsel and independent auditors under New York’s Banking Law.
“With this action, DFS is delivering on a promise I made to ensure the Department engages in an open dialogue with the financial services industry to streamline processes,” said Superintendent Lacewell. “This is one of the many steps DFS is taking to ensure an efficient regulatory structure to assist the industry.”
Currently, regulated entities must receive prior written approval from DFS each time they want to share confidential supervisory information with legal counsel or with independent auditors employed by the regulated entity to provide legal or auditing services to the regulated entity.
Under the new proposed regulation, a regulated entity may share confidential supervisory information with its legal counsel or independent auditor without the prior written approval by the Department if there is written agreement between the regulated entity and their counselor or auditor in which the legal counsel or independent auditor agrees, among other things:
- To keep such information confidential;
- To only use disclosed confidential supervisory information for the purpose of providing legal representation or auditing services to the regulated entity
- To make no disclosure of the confidential supervisory information to its employees, directors, or officers except to those that “need to know” and only on the condition they maintain confidentiality of the information.
The regulated entity must keep a written record of all confidential supervisory information disclosed pursuant to the regulation and a copy of each written agreement.
The new proposed regulation is subject to a 60-day comment period following publication in the State Register on November 27, 2019. A copy of the proposed regulation can be found here on the DFS website.