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To Stay on SEC’s Good Side, FA Practices Need to Monitor Online Communications

January 10, 2019

The SEC is scrutinizing the various ways financial advisors communicate electronically, and to avoid drawing the regulator’s ire, advice practices should ensure adequate monitoring and compliance of online accounts and the use of personal devices, according to news reports.

The SEC’s examiners have found deficiencies in how advice firms monitor internal communications as well as social media, according to a recent risk alert from the regulator cited by FA magazine.

The SEC is concerned that while the amount of electronic messaging is increasing, many companies haven’t set up clear compliance procedures for its use, Robert Cruz, senior director of the information governance practice at electronics communications solution provider Smarsh, tells the publication.

Regulators are particularly focused on instances when employees share content or mirror their desktops, he says, according to FA magazine. And prohibiting the use of alternate methods of communication isn’t an option, as employees may end up violating the rule, Cruz tells the publication.

The SEC suggests advice practices regularly review the top social media platforms to ensure their staff aren’t using them in violation of the firm’s policies, according to FA magazine.

Companies should also automate alerts to notify them when the company’s or an employee’s name shows up on websites, according to the regulator, the publication writes. In addition, advice practices should require employees to get prior approval to access company email and business applications from personal devices, the SEC says, according to FA magazine.


The regulator also expects companies to figure out which methods of electronic communication, including apps, should be prohibited when it comes to business communications, the publication writes. And advice firms need to ban programs that facilitate anonymous messages, automatic destruction of communication or third-party access or backup of messages, the SEC says, according to FA magazine.

By Alex Padalka
  • To read the FA Magazine article cited in this story, click here.