Do You Know About Recordkeeping Compliance?

1. Which tweet by a broker-dealer below would be considered interactive content that needs to be archived?

“I just bought a new car.”

“I just bought shares of ___ car company.”

c. Both the SEC and FINRA have stated that “the content of the communication is determinative.” This means that the topic and context of the communication will determine if the regulations will apply. If the communication is even tangentially related to the advisor’s business, it must comply with recordkeeping regulations.

Explanation

c. Both the SEC and FINRA have stated that “the content of the communication is determinative.” This means that the topic and context of the communication will determine if the regulations will apply. If the communication is even tangentially related to the advisor’s business, it must comply with recordkeeping regulations.

2. Are broker-dealers allowed to use social media?

Yes

No

In 2013, 19.3% of advisors surveyed by InvestmentNews acquired new clients using social media.

Explanation

In 2013, 19.3% of advisors surveyed by InvestmentNews acquired new clients using social media.

3. When does a firm "adopt" third-party content?

An executive of the firm was quoted in an article about an industry topic.

The firm commissions an ad agency to create a billboard ad.

The firm was the subject of an article.

The firm reposts or shares an article on its website, blog or social media site.

A firm “adopts” social media content when it explicitly or implicitly endorses or approves content after it has been posted. For example, a firm that reposts an article on its blog, links to an article on its website or sponsors an article has adopted that content. Firms will need to archive such content.

Explanation

A firm “adopts” social media content when it explicitly or implicitly endorses or approves content after it has been posted. For example, a firm that reposts an article on its blog, links to an article on its website or sponsors an article has adopted that content. Firms will need to archive such content.

4. Which of the following online content is considered interactive content and needs to be archived?

Facebook wall activity

The “About Us” page on your website

Testimonials

Blog post

Interactive content is content that is conversational and encourages discussion. All interactive content must be archived.

Explanation

Interactive content is content that is conversational and encourages discussion. All interactive content must be archived.

5. When will emails trigger recordkeeping provisions?

All emails sent from or received by the firm’s domain need to be archived.

Email recordkeeping provisions depend on the content of the email communication.

All emails originating from the firm’s IP address will trigger recordkeeping provisions.

Only emails sent or received during normal operating hours will trigger recordkeeping provisions.

Email compliance follows the same provisions as other official written forms of communication. Like interactive social media content, the communication of email content is determinative and compliance only applies to communication that relates to business.

Explanation

Email compliance follows the same provisions as other official written forms of communication. Like interactive social media content, the communication of email content is determinative and compliance only applies to communication that relates to business.

6. Fill in the blank:SEC Rule 17a-4(b) requires broker-dealers to preserve records of not less than _____ years.

Two

Three

Four

Five

Rule 17a-4(b) requires broker-dealers to preserve certain records for a period of not less than three years.

Explanation

Rule 17a-4(b) requires broker-dealers to preserve certain records for a period of not less than three years.

7. Fill in the blank:SEC Rule 17a-4(b) requires broker-dealers to preserve certain records for at least three years. What is the required amount of time for these records to be kept in an easily accessible place?

Six months

One year

Two years

Three years

Every member, broker and dealer subject to § 240.17a-3 shall preserve for a period of not less than three years, the first two years in an easily accessible place.

Explanation

Every member, broker and dealer subject to § 240.17a-3 shall preserve for a period of not less than three years, the first two years in an easily accessible place.

8. Why does a basic file server or shared drive NOT meet recordkeeping compliance?

File servers and shared drives actually do meet every recordkeeping compliance provision.

It lacks a searchable index.

Digital files do not meet recordkeeping compliance. Physical documents are required.

Many file servers and shared drives do not meet the minimum system requirements as mandated by FINRA.

Having document indexing, which facilitates document retrieval, is required by SEC 17a mandates. Without an efficient index, it is difficult to find specific information. Data must be stored on indelible, non-rewritable media.

Explanation

Having document indexing, which facilitates document retrieval, is required by SEC 17a mandates. Without an efficient index, it is difficult to find specific information. Data must be stored on indelible, non-rewritable media.

9. Which of the following online content is considered static content and needs to be archived?

LinkedIn recommendations

Blog comments

Testimonials

Social media profiles

Static online content is content that, once published, won’t frequently change. Along with social media profiles, static content also includes websites and blog posts. All static content must be archived.

Explanation

Static online content is content that, once published, won’t frequently change. Along with social media profiles, static content also includes websites and blog posts. All static content must be archived.

10. When does a firm become "entangled" with third-party content?

An article was written about the firm.

An executive of the firm was quoted in an article about an industry topic.

An article was published after it was reviewed by the firm.

An employee of the firm publishes an article on the firm’s blog.

A firm becomes “entangled” when it involves itself with the preparation of the content. For example, a firm that solicits, reviews or approves an article prior to publication is entangled with that article. Firms will need to archive such content.

Explanation

A firm becomes “entangled” when it involves itself with the preparation of the content. For example, a firm that solicits, reviews or approves an article prior to publication is entangled with that article. Firms will need to archive such content.