Email and communications review. A must for advisory firms. A burden for compliance programs.
While understanding what and how your advisers are communicating with clients is an essential compliance task, the act of reviewing countless emails, social media messages and more, drains resources for firms both large and small.
In this blog, we’ll identify three communications review best practices and highlight how COMPLY’s Email and Communications Review module helps firms COMPLY with confidence.
Email and Communications Review: Background
The Investment Advisers Act of 1940 (the “Advisers Act”) Rule 204-2(a) requires that an investment adviser “keep true, accurate and current books and records relating to its investment advisory business,” including “(7) [o]riginals of all written communications received and copies of all written communications sent by such investment adviser” relating to a number of core investment advisory business functions. This includes recommendations, advice, execution, or orders to execute any securities transactions.
Furthermore, per Rule 204-2(e)(1),“all books and records required…shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on such record, the first two years in an appropriate office of the investment adviser.”
In addition, Section 203(e)(6) of the Advisers Act subjects an adviser to censure, fine or penalty for failing to “reasonably supervise its associated persons with a view to preventing violations of the provisions of such statutes (Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940, Investment Advisers Act of 1940 and Commodity Exchange Act), rules, and regulations.” This has led to an industry best practice wherein investment advisers perform supervisory reviews of employee communications in order to detect instances of noncompliance with securities regulations, as well as the firm’s policies and procedures.
Therefore, a comprehensive communications compliance program should include appropriate policies and procedures tailored to the business, plus systems and processes for reviewing such communications.
What specific communications might be included in the list to review?
- Your website
- Your social media
- Your emails
- Your text messages
- Your messaging app communications
- Any other communications with potential or current clients
In short, your firm is responsible for reviewing employee communications to ensure that either (i) no inappropriate or noncompliant messages have been sent to potential or current clients or (ii) the firm promptly addresses any such inappropriate or noncompliant correspondence.
While on the surface this list may seem manageable, as a firm grows, so do its daily communications…opening the door for potential acts of noncompliance and increasing the burden placed on your compliance team.
Email and Communications Review: Best Practices
In order to best comply with SEC (and relevant state) requirements, we suggest following these top three best practices:
- Creating thorough policies and procedures, which identify acceptable channels for client communications and set processes for archiving said channels
- Regularly reviewing a sample of client communications to analyze for any potential acts of noncompliance
- Investing in technology or managed services to aid in the (arduous) process of these communication reviews
Email and Communications Review: COMPLY™ Managed Services
COMPLY’s Email and Communications Review offering takes the burden off your team, while helping your program maintain compliance with SEC standards.
Because why spend your days up to your eyeballs in your coworkers’ emails, when you could be addressing more pressing issues, such as the 2024 SEC Examination Priorities, instead?
With the Email and Communications Review module, COMPLY team members leverage your firm’s existing email archiving and surveilance solution to review communications from your firm’s supervised persons and provide detailed reports on any potential issues uncovered.
COMPLY Managed Services packages are designed to take the administrative load off of your firm to allow for more time spent on the strategic, big-picture compliance priorities. As an extension of your compliance program, COMPLY provides the benefit of:
- A team of experts with decades of in-depth regulatory knowledge
- The assurance of an extra set of hands helping you make sure nothing falls through the cracks
- Additional resources added to your program without significant budgetary burden
Ready to check email and communications review off your to-do list? Schedule time to learn more about COMPLY’s Email and Communications Review offering.