Facebook: Mo’ Walls, No Problem
By: Amy Dugdale | Posted: 2010-03-04I’ve mentioned before that I use Facebook. And to be honest, I really like the way it helps me stay current with friends far and near. That’s why I'm pretty excited about the recent launch of our social media archiving solution. With this announcement, we’re putting Facebook back in the hands of many financial advisors that use it as a way to network with current and future clients.
In their recent guidance, FINRA has made it clear: if representatives at FINRA-registered firms want to use Facebook for their business, they need a way to ensure that their wall content can be captured for compliance review. If this content can’t be captured, then the rep has to disable their “wall.”
The “wall” is one of the best parts of Facebook and disabling it just isn’t practical. The good news is that there’s another way now. Firms can deploy LiveOffice Social Archive to help them properly capture their wall content and make it available for compliance review.
I’ve said previously that it’s up to technology companies like ours to make it possible for financial services companies to continue using the communication and collaboration tools they need to be successful. We’ve taken that responsibility very seriously over the years and will continue to do so.
Tweeting Financial Advisors? FINRA Rules Apply.
By: Amy Dugdale | Posted: 2009-06-26Anyone who was around the financial services industry in the early 2000's when
registered reps and brokers started using email for business remembers the great debate - "What will FINRA say about email?" Today, there's a new question - "What will FINRA say about Twitter?"
Leave it to great tech writer Davis Janowski (@ddjanowski)of InvestmentNews to clear up FINRA's take on tweeting. According to his recent article, "FINRA doesn't believe it's appropriate to make special rules for each new communication tool that becomes available."
"We are very interested in accommodating new technology, but the challenge is to have rules that are both specific enough to address current issues, but broad enough to accommodate evolving technologies and future developments," said Thomas Pappas, FINRA's vice president and director of the advertising regulation department in Rockville, Md. "If we were to write a rule that addresses something too specific, say Western Union telegrams, it wouldn't have taken long before that rule was deemed obsolete," he said.
That means, in order for reps to keep their tweets on the up-and-up, they'd have to be archived and potentially pre-screened (just like websites and emails), which as one of the story sources observes -basically removes the spontaneous nature of social media (i.e. the whole point) from the equation.
Like I said, great article that answers a question many of us in the industry are asking. Certainly there is no question that new technologies pose compliance risks. Here's my take - we weren't sure how we were going to deal with websites back in the mid-90s, we also weren't sure what would happen with email and IM in the early 2000s, but we figured it out (necessity is the mother of invention, right?). Now another communication method is out there - and it's up to tech vendors like us to figure out what we need to develop in order to make Twitter another tool in the quiver of financial services professionals (and all organizations, for that matter).
Game on.
Testing out Twitter? Follow me at @adugdale (recommended if you like celebrity gossip mixed w/ tech observations) or follow our company @liveoffice (recommended if you're interested in finding out what's going on at our org).
*Edit
Check this out: Great blog post on Twitter and Compliance from Doug Cornelius (blogger & CCO at Beacon Capital).
Digital Voicemail: Convenience or Compliance Risk?
By: Stephanie O'Neill | Posted: 2009-06-02While convenient new technologies seem to emerge by the minute, compliance departments are continually plagued by the challenges they present. More than ever, many closely regulated industries are under a microscope-especially financial services. The Financial Industry Regulatory Authority (FINRA) expects its member firms to have policies and procedures in place to "monitor all electronic communications technology used by the firm and its associated persons to conduct the firm's business." Although email has been the primary focus of such regulations to date, more and more new technologies are coming into play.
So where does digital voicemail fit in? The short answer: digital voicemail is discoverable, and you should be prepared to handle it no differently than email when it comes to compliance.
No matter what type of voicemail system you have, the way the associated data is retained is likely under your control, which means it must adhere to your data backup and retention polices. Although unified messaging solutions are convenient, often delivering voicemail message notifications and audio files directly to your email inbox, they tend to pose the most challenges when it comes to retention and discovery. Some regulations, such as amendments to the Federal Rules of Civil Procedure, specifically callout "sound recordings" and specify that they must be reasonably accessible and not burdensome to produce (see FRCP Rule 26 and Rule 34); however, more and more courts are not accepting accessibility or financial burden as an excuse for failing to provide relevant data during discovery (see eDiscovery & Compliance Considerations with Unified Messaging).
Unfortunately, very few companies are prepared for discovery of digital voicemail and other audio files, which could end up costing them a significant amount if they end up in litigation. When it comes to discovery, it's only a matter of time until voicemail and other audio files are just as common as email communications. Whether you're prepared or not, your compliance obligations are expanding. Companies must ultimately assess their own risk and determine the best course of action to meet their specific compliance needs, but a little preparation goes a long way.
Don’t try pleading ignorant – Part I
By: Dean Nicolls | Posted: 2009-05-06The following stat stopped me in my tracks.
According to Kroll Ontrack, more than half of the approximately 138 reported electronic discovery rulings (issued in the U.S. in the first 10 months of last year) addressed court-ordered sanctions, data production and preservation, and spoliation issues of ESI (electronically stored information). Increasingly, judges can and will hand out sanctions for mishandling ESI and not providing clear policies for document retention.
The challenge for many companies facing litigation is just the sheer volume of electronic data out there. In today's electronic age, 90% of documents are no longer printed on paper. And email has become one of the biggest sources of ESI as well as one of its biggest challenges. So how can your company be prepared should it face some type of litigation? Part of the solution involves process. Part of the solution involves technology. The former is discussed below and the latter will be the focal point of part II.
On the process front, you need to determine which ESI you plan to retain and for how long. So, let's look at email for the time being.
In highly regulated industries, your retention periods are defined for you by the Securities and Exchange Commission (SEC) and/or the Financial Industry Regulatory Authority (FINRA). With the 2006 amendments to the U.S. Federal Rules of Civil Procedure, ANY company with the potential to be involved in federal litigation (i.e. most companies) should already have a plan in place on how they plan to collect, retain and ultimately dispose of email based on predetermined retention policies. Their email administrator will also thank them for this.
However, policies need to go beyond words. They must be enforced. Courts have taken a dim view on companies that have email policies on the books, but then enforce them in an inconsistent manner. In addition, you need to have a plan on how you intend to retrieve email in the event of legal discovery. But, above all else, there should be a formalized process in place to preserve email via legal holds. In fact, not having such a plan has been the undoing of many corporate defenses in recent years.
My next blog will discuss the items to consider on the technology front...
Merge FINRA and SEC Oversight?
By: Amy Dugdale | Posted: 2009-01-08According to a recent Securities Industry News article, research firm TowerGroup believes "The Securities and Exchange Commissions' investment adviser regulatory functions should be rolled into the Financial Industry Regulatory Authority (FINRA)."
Needham, Mass.-based TowerGroup believes a merger would address what some see as the SEC's failure to adequately police investment advisers by leveraging FINRA's resources, principally in the examination area. "From our perspective, the teeth to do this already exist at FINRA if they are allowed to use them," said senior research director Matthew Bienfang. "The SEC also has the teeth; they just don't have the resources."
But the part of the article that really caught my eye was where the author mentions that "...financially strapped advisory firms [are coming] under growing pressure to cut compliance costs, even as arbitration claims soar."
Working at a company that has helped thousands of registered investment advisors through regulatory audits over the last several years, I can tell you that many of them feel that in light of their limited compliance budgets they are over-regulated. They are small businesses that are expected to have compliance controls in place much like their enterprise-size brethren, which is exactly where SaaS comes in.
When email landed on the compliance radar in the early 2000s, smaller financial services companies quickly started picking up our SaaS email archiving and compliance solution - they realized almost immediately that they could get enterprise-class technology in a reasonable, pay-as-you-go monthly subscription service. Thousands of these companies are now clients of ours and I applaud them for proactively finding a solution that worked for them, both from a budget and compliance standpoint.
So while I won't ring in on whether the SEC and FINRA should merge their oversight branches (I'll leave that to the experts), I will mention that President-elect Obama has appointed FINRA CEO Mary Schapiro to head the SEC. This appointment hints to coming changes at the SEC that may mirror how FINRA currently operates in terms of oversight. With heightened regulatory scrutiny (resulting directly from the recent scandals and economic decline) and big changes coming at the SEC, these are uncertain times for many in the industry, but one thing will remain - our commitment to providing financial services professionals with effective and affordable SaaS tools for managing their email compliance.
Who to blame for the collapse? Check your email
By: Nick Mehta | Posted: 2008-10-28I know we have become somewhat desensitized to the daily triple-digit losses in the Dow Jones Industrial Average. But in case you have been asleep the past year, it's been pretty bad out there, no matter where "there" is.
As humans, it's natural for us to go through the various stages of grief:
- Denial
- Anger
- Bargaining
- Depression
- Acceptance
I think the first "D" (Denial) was pretty much the last ten years.
We are squarely in "A" (Anger) right now, as far as I can tell from hearing our government officials talk, though I'm guessing the Fed and Treasury Department have fast-forwarded ahead into "B" (Bargaining) with our $700 billion.
The next "D" is the word-that-shall-not-be-spoken right now.
And I'm hoping the second "A" (Acceptance) comes soon!
But we've seen the "Anger" phase before many times. Who's responsible, the public cries? Bring them before us! Let's see the evidence. Pitchforks and torches optional.
From my experience, there is only one truth to these situations. The truth is in our email. Remember the Internet bubble? Frank Quattrone (famous investment banker)'s email to his troops ordering them to "clean up" their data after being informed of a federal inquiry? Henry Blodgett (famous research analyst)'s emails that contradicted the positive ratings he was giving to technology stocks? The crazy messages sent by the Enron folks?
After that crash, a wave of email regulations by the SEC and NASD (now FINRA) forced many individuals involved in the securities business to have their email and other communications archived and reviewed. Indeed, billions of those email and IM messages are captured using our own LiveOffice AdvisorMail. But those rules were confined to the securities industry.
What did this crash teach us? Besides us all learning the intricacies of CMOs, CDOs and CDSs, the world has realized that no market is isolated anymore. Wall Street and Main Street are interconnected, whether they know it or not. From Illinois to Iceland, from ARMs to automobiles, we are all tied together financially. Hence, to find the truth, we will need to look at email and records across industries and across the world.
Case in point: bond rating agencies. These companies were the watchdogs that were supposed to measure and publicize the risk of various debt instruments. These firms were the ones that told us that sub-prime mortgages were low-risk. Ouch.
Recently, email messages from these firms were publicized:
``Let's hope we are all wealthy and retired by the time this house of cards falters,'' one e-mail from an S&P employee said.
And more:
In the September 2007 e-mail made public today, the Moody's employee said that it ``seems to me that we had blinders on and never questioned the information we were given,'' according to the congressional investigators. ``It is our job to think of the worst-case scenarios and model them.''
The e-mail continued: ``Combined, these errors make us look either incompetent at credit analysis, or like we sold our soul to the devil for revenue.''
Seriously?
Or check out this instant message trail related to debt rating to make you even more Angry.
It's interesting because having an email archive helps all sides in these scenarios:
- Less cost for the companies involved. Under the Federal Rules of Civil Procedure, these bond rating companies, like all companies under investigation, would be obligated to produce whatever they have that's reasonably-accessible regardless as to cost or effort. At least they didn't have to go back to backup tapes to get these messages and spend millions of dollars doing it.
- More visibility for the public. Obviously this information will help us untangle and get to the core of how we got here. And getting it quickly means we find the truth faster.
I don't know how all of this will shake out for our economy. I pray and hope like the rest of us. But I do know that when bad things occur, it's good to have evidence around to at least understand what happened and learn from it.
