After landmark penalties against 16 Wall Street Firms, the message is clear: firms are expected to abide by the U.S. Securities and Exchange Commission’s (SEC) recordkeeping rules, especially around communication. Advisers’ use of electronic communications tools, such as text messaging, email, and other messaging platforms, may expose firms to compliance risks if the tools’ use is not adequately governed and records of the communication are not retained. In a recent exam, the SEC requested documentation for the following:

• Policies and procedures regarding the use of electronic communications (henceforth “e-communications policies”), including:
  • Approved platforms and devices;
  • Firm-provided platforms and devices, “including but not limited to ‘bring your own device’ software”; and
  • Retention guidelines for such communications.
• Annual reviews of e-communications policies;
• Testing of e-communications policies;
• Supervised persons’ certifications of compliance with their Firm’s e-communications policies;
• Trainings conducted to promote compliance with e-communications policies;
• Any additional information circulated by the Firm to encourage compliance with e-communications policies; and
• Any violations of the Firm’s e-communications policies, including corresponding disciplinary action.

Significant compliance and oversight around electronic communication recordkeeping is necessary. Fairview will continue to update you with in-depth information about any new developments and will be here to assist in anyway as you consider the expectations on your firm and your compliance program.

Fairview provides full-service compliance administration for investment advisers by creating and implementing comprehensive, sustainable compliance programs, including ongoing testing and evaluations to ensure firms remain compliant with SEC regulations. We make sure that internal controls are built into your operations processes, making compliance features inherent to your firm’s culture. Contact us today for additional information about maintaining your compliance program.