Best practices for moving to remote work, according to Finra, include location monitoring to make sure staff are using secured connections and maintaining contact lists so that compliance, legal and operations assistance is easily available.
Finra also emphasized the importance of confidentiality and cybersecurity in a work-from-home environment – employees should have a private workspace and take extra precautions if they work near family members or roommates. Potential conflicts of interest with the employersof family members and roommates should also be considered.
Finra also emphasized the importance of adequate supervision around remote trading and client communications.
The biggest challenge for firms, according to Cruz, revolves around hardware. Finra recommends that broker-dealers only use firm-provided and approved communication systems.
“Whether the person is in your eyesight or working from Pismo Beach, Calif., you still have the same regulatory obligations,” he said. “Finra has not said that they’re going to allow latitude for firms that don’t have this together.”
Firms have no way of knowing whether an advisor’s home computer is up-to-date with the software that keeps them secure and compliant, he said, and advisors might be tempted to use computers and tablets that are easily accessible.
Cruz said that ideally, employees working from home would be using a firm’s centralized, compliant email and messaging platforms, and phones with recording capabilities.
“It comes back to this, from Finra’s perspective: If we can’t’ capture it, you can’t use it,” he said. “There are more companies trying to sanction new communication networks with new technologies behind them. Firms need to be making sure they’re aware of which individual is using which stuff, and that they’re not using tools that an 18-year-old kid knows about but I don’t. Prohibited tools have become very familiar and easy for advisors to access, but the list of those prohibited tools gets longer and longer every day.”
In a work-from-hhome environment, firms should be conducting email reviews and keyword surveillance, said Cruz.
They also should be using recorded linnes for all conversations related to trading orders, said Cruz, and place restrictions on video conferences that could be subject to recordkeeping obligations.
“Finra seems to be reacting as if this is not a temporary situation,” he said. “They’re anticipating that this is going to have a long-lasting effect on the way firms do business, and that’s been echoed in the data that I’ve seen: less than 45% of firms believe that they’re going to go back to the way it used to be. Companies are going to have to invest in continuing to operate in this manner for the forseeable future.”