Tag Archive for: email

Atkins in Forbes: Email and Social Media Compliance

Last month in New York, I was invited to speak with a group of broker-dealer compliance staff at an event about email and social media compliance. More specifically, and to be technically correct, we call this “supervision of electronic communications” and you can read all about it in FINRA Rule 3110(b)(4). There, I had the opportunity to speak with Forbes contributor, Joanna Belbey. Before the event, we had a good discussion on the FINRA 2016 examination priorities and more specifically, how they relate to email and social media compliance. You can read the interview by clicking here: Mitch Atkins Forbes. See the follow-up piece to this (Don’t ‘Set it and Forget it’) by clicking here: Mitch Atkins Forbes Part II.

Email and Social Media Compliance Decrypted

After having worked in regulation for nearly 20 years, working as a consultant to broker-dealers and investment advisers has been truly enlightening, particularly in understanding the perspective of the chief compliance officer. I have had the opportunity to help design, audit and improve systems of supervision for electronic communications. What has become evident in my recent work with consulting clients is that FINRA has been very active in its email and social media compliance reviews. Today, more than ever, the term electronic communications includes far more than email. In the past, firms could be relatively confident if they had a decent email compliance system and banned the use of social media. But today, if talented advisors are not permitted to use popular communication channels, they may work elsewhere – read: competitors.

For these reasons more employers are ensuring that they have top-notch supervisory controls in place to allow the use of communication channels advisors want. To that end, firms wanting to beef up compliance might consider the following:

  1. procedures – development of clear policies and procedures covering communications;
  2. technology – implementation of a cutting edge email and social media compliance platform (but be careful and remember that simply buying the system isn’t enough – FINRA recently published an AWC in which a Chief Compliance Officer was suspended for failing to implement such a system – see FINRA Case 2014039194102 – Feb. 23, 2016);
  3. personnel – ensuring that persons tasked with conducting email and social media compliance reviews are adequately trained and that adequate resources are devoted to conducting reviews;
  4. controls requiring annual compliance questionnaires in which advisors certify their compliance with policy and disclose all communication channels they use;
  5. testing – some firms are hiring summer interns to search advisor names against social media sites (and who is better at social media?).

And finally, your keyword flagging database is the key (no pun intended) to the effectiveness of your supervisory system. Make sure that the database is reviewed frequently, that it is dynamic and evolves with both the business of the firm and the changing times. See my LinkedIn article about that for more details.

Mitch Atkins is Founder and Principal of FirstMark Regulatory Solutions, a broker-dealer and investment advisor compliance consulting practice in Boca Raton, Florida. Contact Mitch at 561-948-6511.


Electronic Communication “Let’s Talk Supervision”

Compliance risks exist in your electronic communication. How will you effectively manage these risks? With the volume and velocity of information flowing through electronic communications channels, supervision has become a real challenge. Mitch Atkins presented at the Actiance Executive Briefing Series in New York on April 7, 2016 on how organizations can leverage their electronic communications applications to comply with regulatory requirements. Entitled, “Let’s Talk Supervision: Freedom with Responsibility” the talk took place at the Viceroy hotel in Midtown Manhattan. Among the topics discussed were:

  • FINRA 2016 examination priorities
  • Electronic communications requirements
  • Managing volume in supervisory reviews
  • Common challenges in managing reviews
  • Supervision of non-email content

Atkins discussed recent FINRA disciplinary actions that involved electronic communications rules violations, including two from the 1st quarter of 2016 in which FINRA named individuals, including a Chief Compliance Officer. CCOs are faced with many challenges from day to day and some of those include managing the review of electronic communications. During the presentation, Atkins stated that excessive volume, low value keywords, lack of training for reviewers and representatives, and insufficient internal controls contribute to failures in thia area. He emphasized that electronic communication channels are dynamic as is the language that is used through these channels. As such, supervisory systems related to electronic communications must also be dynamic. Keyword flagging databases must be updated frequently and should be developed with the input of the supervisors of the departments for which electronic communications are being monitored. Additionally, broker-dealers must develop and document that training has been conducted for associated persons who use electronic communications. He advised that systems of supervisory controls such as annual attestations by associated persons as to the electronic communications channels they use and that they understand the prohibition of using outside email or non-email channels for business communications. He recommended periodic testing of electronic communication channels to ensure that all are being captured in supervisory systems. He also queried the audience whether, in light of FINRA’s recent emphasis on culture of compliance, they know what culture is appearing in their electronic communications.

Electronic Communication Live Webinar

Additionally, Mitch Atkins was a featured presenter at the Actiance “From Supervision to Surveillance” webinar on April 12, 2016. This session also cover challenges in surveillance of electronic communication. View more information about the live webinar here. Another session will occur on May 5, 2016, and it is not too late to register.