The affordability of email in comparison to other channels has long made it a preferred choice among organizations looking to communicate with their audience. However, as affordable as email can be, it is also a channel that must be respected in light of federal regulations designed to prevent abuse and/or misuse. Failure to do so can severely undermine the cost-effectiveness that helps make email so attractive.
One recent example should serve as a cautionary tale for any organization dealing in investment services and communicating related information to their customers. In May 2013, FINRA reported that it had imposed a $7.5M fine on LPL Financial LLC for failures related to email communications, the largest such fine in FINRA’s history. These failures prevented the company from properly retaining email messages at various times over a six-year period starting in 2007, a large number of which originated from independent contractors representing the company.
SEC Rule 17a-4 requires email messages related to securities to be retained and retrievable by the sending organization. This includes messages sent directly by the organization or, as noted above, any individual acting on behalf of the organization. This can also pose problems for organizations with multiple business units sending email independently, as there is often no central archive of sent messages. In other cases, such an archive exists, but is reliant on manual processes susceptible to human error/oversight.
Ideally, any organization sending emails that fall under the reach of SEC Rule 17a-4 should have an automated process in place to archive messages in a central location where they can’t be modified or deleted, allowing for the timely and accurate retrieval of any sent message(s) upon request. If this sounds applicable to your organization, SM:Vault from Harland Clarke Digital is uniquely suited to meet the requirements of SEC Rule 17a-4.
With the proper safeguards in place, you can rest easy that your email program will continue to be as cost-effective as it has always been.
LPL hit with largest Finra fine ever for email case (*login required)