Rubin said the SEC’s enforcement makes clear that reps and others aren’t receiving enough training to apply and understand firm’s policies.
As part of the sweep, the SEC is now asking if each firm’s training is effective and when it was administered last. “Annual training may not be enough in the current environment if [reps or staff] are working from home, especially if they’re relying rely on what a year or two ago when they thought texting and using their own devices was fine,” Rubin said.
He suggested using the September settlements as a “scared straight exercise.”
“Just because you have policies and procedures in place and train doesn’t mean everyone will do the right thing. First management has to walk the walk and talk the talk. What that means is the leadership can’t tell advisors or employees don’t text or use non-company phones, if they do. So, the culture of a company is important,” he added.
Beyond the sweep exams, Rubin and Shafir said that the SEC is actively looking for firms’ off-channel communications using subpoenas, onsite examinations and customer complaints.
Shafir said firms can “absolutely use off-channel communications and devices if they have the technology to capture, surveil and archive.”