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FINRA Cracks Down on SEC Telecom Archiving Violators

February 28, 2017

Companies that operate in financial services are under pressure to operate under a variety of regulations, not the least among them telecommunications archiving. The Securities and Exchange Commission (SEC (News - Alert)) rules 17a-3 and 17a-4 govern on how regulated entities, including financial services companies, must do business. A major part of these regulations is the archiving of communications. Companies affected by the rules are required to preserve originals of all communications received and copies of all communications sent relating to their business, for a period of not less than three years.

Recently, the federal government has been cracking down on companies that don’t follow the SEC regulations. Late last year, the Financial Industry Regulatory Authority (FINRA) issued over $14 million in fines for violations of rules regarding preserving communications. Many of the fines were for organizations that did not understand that instant messages must be preserved in addition to telephone calls and emails. The news of the fines is particularly important for companies that use messaging platforms such as Cisco Jabber or Microsoft (News - Alert) Skype for Business.

Organizations that must meet the SEC’s telecom archiving rules need to consider a call and contact archiving system that can handle multiple media, and be easy to use and searchable, according to a recent blog post by Mitch Weiss writing for ISI Telemanagement Solutions (News - Alert), otherwise you’ll have a big headache in a best case scenario, and stiff fines in a worst-case scenario. 

“Simply putting records into a big database and hoping for the best is not a solution,” he wrote. “When the auditors come knocking, you will need to be able to prove, that you can rapidly retrieve the relevant records in a timely manner. You will also need to prove that you review these records on a regular basis for possible violations. Thus, you need a complete application that includes critical items such as a complete audit trail, litigation hold, easy to use search functions, and automated flagging to meet these requirements.”

Ideally, companies that must remain compliant with SEC telecom archiving rules should look for a call accounting system that operates robustly in the background, eliminating the need to fiddle with the recording system on a regular basis. A compliant call accounting solution also allows financial services companies to maintain the “ethical wall” necessary for businesses to keep communication from occurring between entities within an organization that aren’t permitted to “collude.” In a complex regulatory environment, crossing your fingers and “hoping for the best” is simply too costly and dangerous a position to take.



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