Under regulations governing the securities industry, it's not enough for firms merely to archive e-mails; they must be able to furnish them to regulators “promptly.”
But regulators never defined the term, leaving compliance executives baffled: They simply do not know how much time they have to comply.
However, advisers and broker-dealers this year can expect a definitive answer on what the word “promptly” means in Securities and Exchange Commission Rule 17a-4(j), said Afshin Atabaki, assistant general counsel of the New York- and Washington-based
Financial Industry Regulatory Authority.
An expert in electronic media and record retention, he was speaking as a participant of the documents panel at the 2007 Fall Technology and Compliance Symposium, held in New York last week and sponsored by the San Diego-based National Association of Independent Broker/Dealers Inc.
Mr. Atabaki reminded attendees that e-mails delivered through hand-held devices are subject to the same regulations as desktop communications.
For instance, BlackBerry e-mails fall under the purview of desktop e-mail under regulations from FINRA of New York and Washington, and the Securities and Exchange Commission. “It doesn't matter that the e-mail is offloaded onto a separate dedicated server,” he said.
Also, encryption of e-mail is permissible under SEC and FINRA guidelines, but the ability to unlock the encryption must be available at the time of a regulatory examination.
Stephen D. Marsh, a panelist and chief executive of Smarsh Inc., a Portland, Ore., e-mail compliance provider, said advisers and broker dealers should think about issues of e-mail compliance.
“Generally, firms don't have a problem archiving their e-mail,” he said. “Their problems begin, though, during the examination process when they have to retrieve something, and it then takes a few days to go back and find it on their backup tapes.”
One key differentiator of Smarsh is that the company specializes in meeting the needs of the financial services organizations. It is being used by more than 1,500 financial firms, including banks, broker-dealers, hedge funds and investment advisors to satisfy rules SEC 17a-4 and SEC 204-2, as well as NASD 3010 and NASD 3110.
SEC 204-2 is an amendment to the adviser record-keeping rule that requires retention of information related to
hedge fund activity among advisers that are fund managers. NASD 3010 and NASD 3110 are the same regulation, but they are enforced by NASD.
Competitors of Smarsh are LiveOffice Corp. of Torrance, Calif., with its AdvisorMail solutions; and Global Relay Communications Inc. of Vancouver, British Columbia. LiveOffice has a wide range of e-mail compliance products across multiple industries.
For more information, go to smarsh.com, advisormail.net and globalrelay.com.
Insurance Technologies LLC, a Colorado Springs, Colo., provider of point-of-sale software for insurance products, was an exhibitor at the conference.
A stop at its booth revealed that its ForeSight framework technology is the web interface of choice for many of the nation's largest insurance companies. Of much more interest to advisers that are selling or thinking about selling annuities is a forthcoming product (expected to be available in early 2008) that will allow free and “simple to search” comparisons — including real-time quotes and pricing of products — from many major insurance carriers.
For more information, go to insurancetechnologies.com.
Finally, Cabinet NG Inc. of Madison, Ala., unveiled its new Retriever technology at the show. Cabinet NG is an automated-document- management and workflow software product meant for small to midsize businesses — a category that fits many independent advisory firms.
The technology offers a simple approach to integrating most any Windows-based business application, Microsoft Word and Excel among them.
The way the Retriever system works is that upon installation, a widget — that is, a small, standalone software application — runs in the background on a user's personal computer. Retriever then runs in the background within other Windows-based applications that are tied to an adviser's document management system. If an adviser then needs to cross-reference or search for other related documents, they don't have to leave Word (as just one example) to find them, or append notes or other information.
For more information, go to cabinetng.com.
Davis D. Janowski can be reached at [email protected].
