Q: You are a registered representative with a FINRA-registered broker-dealer. You also have your own business, John Smith and Associates. You create a Web site and set up email under that name. Can you do this? You also have your own fixed business or mortgage business. Does your broker-dealer have to monitor and archive your emails?
A: The issue is not as easy as it sounds. The Securities Exchange Act was instituted in 1934 to protect investors from fraudulent or misleading claims. SEA rule 240.17a-4, titled “Records to Be Preserved by Certain Exchange Members, Brokers and Dealers,” requires that broker dealers must retain electronic communications with customers and other communications that are germane to their business, for at least three years.
These communications must be easily accessible, indexed and stored on non-erasable, non-rewriteable media. Additionally, the Act requires that records be kept for the purposes of review and auditing of securities transactions. FINRA’s 3010/3110 enforces SEC 17a-4. These regulations apply to broker-dealers under the jurisdiction of FINRA. If you are associated with a broker-dealer, this applies to you.