The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations has recommended that registered investment advisors review their electronic communication, ThinkAdvisor writes.
Current Firm Policies Fall Short, But There Are Things Advisors Can Do
A recent OCIE initiative looked into advisors’ compliance with the Books and Records Rule and the procedures they have in place to ensure compliance with SEC regulations, according to the publication. The study found that a number of advisors had no testing or monitoring of electronic communication used to comply with firm procedures and policies, ThinkAdvisor writes.
The survey examined what kind of electronic messaging and electronic communication, such as text messaging, instant messaging and personal email, firms and their personnel are using and how they are addressing the risks of evolving electronic communication, according to the publication. The communication could be through in-house or third-party systems and sent via firm-issued or personal electronic devices, according to ThinkAdvisor.
Following the survey, the OCIE prompted advisors to review the risks, practices, policies and procedures for electronic communication and look into where improvements could be made to better comply with regulatory requirements, the publication writes. Additionally, they offered examples of how practices could help advisors meet their regulatory obligations, according to ThinkAdvisor. One recommendation was for advisors to ban the business use of technology that could be misused to communicate anonymously, block third-party viewing and backup or automatically destroy messages, the publication writes. Additionally, the OCIE suggested that advisors regularly review social media sites to ensure that employees aren’t breaching policies, ThinkAdvisor writes.
While this initiative was limited to registered investment advisors, the OCIE made clear that other regulated financial entities will likely face similar challenges, according to the publication.
