The U.S. Securities and Exchange Commission SEC) has taken a stricter stance in enforcing communication compliance across industries. It has also become more stringent in preventing employees from sending business-related messages through unsupervised messaging applications. The regulator has also banned its employees from using third-party messaging applications and the text messaging capabilities of agency-controlled devices.
Moreover, the regulator has also enforced massive penalties on financial firms that violated its various regulations. This shows how seriously they take unsupervised messaging. With this, compliance teams in financial organizations must equip themselves with a deep understanding of SEC regulations for mobile archiving and monitoring.
Key SEC Regulation Violations That Have Cost Firms Millions in Penalties
Financial organizations are subject to strictly follow SEC and Financial Industry Regulatory Authority (FINRA) rules on mobile compliance.
One key regulation is SEC Rule 17a-4, which requires broker-dealers to capture and maintain electronic communication. This includes the requirement to capture voice calls, text messages, and instant messenger communication for at least six years in a format that cannot be modified or deleted, like the WORM (write once, read many) format.
Organizations also have the choice of safeguarding electronic communication with an audit trail, provided that all the alterations and deletions are time-stamped and the original message can be recreated for regulatory audits. The recorded communication must be retrievable in around 24 hours and a usable electronic format.
Another key regulation is the Best Interest (Reg BI) Amendment to SEC Rule 17a-3, which aims to protect retail customer interests. This amendment mandates broker-dealers to record all interactions and information exchanged with customers for at least six years, along with the identity of the registered representative of the organization handling the account.
Conclusion
With the massive surge in enforcing communication compliance in the financial sector, compliance officers may not have any challenge in convincing executives to implement company-wide programs and technology that comply with SEC guidelines.
However, to smoothen the process of integrating compliant messaging solutions, it is important to look for solutions that are user-friendly and do not require major changes in employee behavior. This helps promote a more convenient manner for employees to collaborate and interact while remaining compliant with regulations.
Learn more about secure messaging solutions and mobile archiving products today with TeleMessage.