While the advisory industry has traditionally used siloed and rule-based approaches to monitor and control employee communication, Cruz said, digital platforms that combine integrated data storage and search capabilities can aid firms in reducing compliance risk.
The SEC said it expects firms to determine which forms of electronic communication can be used by employees and to prohibit business use of apps and other technologies that can be readily misused. Specifically, firms should be prohibiting messaging that allows for anonymous communication or automatic destruction of messages or prohibits third-party viewing or back-up.
If advisors permit the use of personal mobile devices for business purposes, firms should adopt and implement policies and procedures addressing such use, the SEC alert said.
“In the event that an employee receives an electronic message using a form of communication prohibited by the firm for business purposes, the firm should have procedures that require the employee to move those messages to another electronic system that the advisor determines can be used in compliance with its books and records obligations, and include specific instructions to employees on how to do so,” the SEC said.
If advisors permit personnel to use social media, personal email accounts, or personal websites for business purposes, firms should adopt and implementing policies and procedures for the use, monitoring, review, and retention of such electronic communications and inform employees that violations may result in discipline or dismissal, the agency said.