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December 17, 2018 at 10:29 AM
The Securities and Exchange Commission’s exam division is warning registered investment advisors to review their electronic communication procedures, as recent exams showed advisors failed to ensure compliance with SEC rules.
In its Risk Alert released Friday, OCIE staff said a recent exam initiative focused on whether and to what extent advisors complied with the Books and Records Rule and adopted and implemented policies and procedures as required by the agency’s Compliance Rule.
During the course of the initiative, OCIE examiners “observed a range of practices with respect to electronic communications, including advisors that did not conduct any testing or monitoring to ensure compliance with firm policies and procedures.”
OCIE surveyed RIAs to learn the types of electronic messaging used by firms and their personnel, and reviewed firms’ policies and procedures to understand how advisors were addressing the risks presented by evolving forms of electronic communication.
“Electronic messaging” or “electronic communication” included written business communications conveyed electronically using, for example, text messaging, instant messaging, personal email and personal or private messaging.
OCIE included communications conducted on the advisor’s systems or third-party applications or platforms or sent using the advisor’s computers, mobile devices issued by advisory firms, or personally owned computers or mobile devices used by the advisor’s personnel for the advisor’s business.
OCIE encourages advisors “to review their risks, practices, policies and procedures regarding electronic messaging and to consider any improvements to their compliance programs that would help them comply with their regulatory requirements.”
