Financial Services

Banks, brokerage firms, stock exchanges, insurance companies and hedge fund companies all need to meet specific regulations in regards to mobile electronic communications, and TextGuard can readily provide solutions to ensure that your company complies with the legislation that applies to your industry and the mobile mandate’s implied.  TextGuard solutions help companies in the financial services industry meet compliance requirements of the following regulatory bodies and regulations:

FINRA

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulatory body established for securities firms in the United States.  FINRA oversees over 643,000 securities representatives, and have succeeded the National Association of Securities Dealers (NASD) as well as the regulatory branch of the New York Stock Exchange.

FINRA aims to educate investors and give them the resources to build their knowledge of financial products and their rights as investors. FINRA’s primary objective is to ensure that emerging issues are addressed in a regulatory capacity before they become problems for investors or the market as a whole. Acting as the catalyst behind many financial industry rules and regulations, FINRA is currently focused on ensuring the appropriate mobile electronic communication compliance rules are established and followed.

In FINRA Regulatory Notice 07-59 (December 2007), FINRA provided guidance regarding the review and supervision of electronic communications.  When employing risk-based procedures to review electronic communications, FINRA guidance suggested that members consider how to effectively:

  1. “flag” electronic communications that may evidence or contain customer complaints, problems, errors, orders or other instructions for an account; or evidence conduct inconsistent with FINRA rules, federal securities laws and other matters of importance to the member’s ability to adequately supervise its business and manage the member’s reputational, financial and litigation risk;
  2. Identify such other business areas the member may identify as warranting supervisory review; and
  3. Educate employees to understand and comply with the member’s policies and procedures regarding electronic communications.

In adopting such supervisory review procedures, members should, among other things:  Identify the types of correspondence that will be pre- or post-reviewed, Identify the organizational position(s) responsible for conducting reviews of the different types of correspondence;  Monitor the implementation of, and compliance with, the member’s procedures for reviewing public correspondence;, Periodically re-evaluate the effectiveness of the member’s procedures for reviewing public correspondence and consider any necessary revisions; Provide that all customer complaints, whether received via email or in other written form, are reported to FINRA in compliance with the FINRA reporting requirements; Prohibit employees from the use of electronic communications unless such communications are subject to supervisory and review procedures developed by the member; and Conduct necessary and appropriate training and education.

Member electronic communications related to a member’s business are subject to it overall supervisory and review procedures. They are also subject to FINRA rule requirements specifically addressing communications with the public.  And, for purposes of the FINRA guidance, “electronic communications,” “email” and “electronic correspondence” ”may be used interchangeably and can include such forms of electronic communications as instant messaging and text messaging.”

With TextGuard, you can easily implement a complete mobile compliance solution to comply with these requirements.

SEC Rule 17a-4

SEC Rule 17a-4 was designed to protect investors information that is misleading or fraudulent allegations made by securities dealers. SEC 17a-4 was amended in 1994 to introduce compliance regulations for electronic communications.  Any individual or company that trades securities is bound by these regulations, and violators have previously been fined for more than a million dollars.

At a high level, SEC Rule 17a- 4 requires the following of organizations:

  • Original copies of all communications, such as interoffice memoranda and email messages, must be retained for a period of no less than three years, the first two in an easily accessible location.
  • Records must be maintained, retained, and available to be produced or reproduced using either micrographic media (such as microfilm or microfiche) or electronic storage media (any digital storage medium or system).

With TextGuard, you can easily implement a complete mobile compliance solution to comply with these requirements.

FSA (UK)

In March 2008, the Financial Services Authority in the UK (FSA) published rules (PS08/1) on recording voice conversations and electronic communications (“the taping rules”). These rules require firms to record “relevant communications” and keep them for six months. “Relevant communications” refer to voice conversations and other electronic communications that involve the receipt of client orders and negotiating, agreeing and arranging transactions in the equity, bond and financial and commodity derivatives markets. These rules, which became effective from March 2009, were aimed mainly at tackling market abuse by ensuring access to high quality, contemporaneous evidence to help monitor, investigate and prosecute cases. Mobile phones and mobile communications (except emails) were excluded from these rules. Their exclusion was primarily based on concerns that the technology to capture these communications was insufficiently developed.

However, after having met with technology suppliers, trade associations and economic consultants to test the feasibility (both from a technology and cost perspective) of applying a taping requirement to mobile phones, the FSA seems very close to removing the mobile exclusion.  In March 2010, the FSA issued a consultation paper (CP 10/7) seeking feedback on a proposal to remove the exemption for relevant communications (except emails) “…made with, sent from or received on a mobile telephone or other mobile handheld electronic communication device.”

The proposal is to extend the current taping obligations to require the recording and storage of all “relevant communications” made with, sent from or received on mobile phones, but only those mobile phones that are issued by firms for business purposes.  To support this, the FSA also proposes to introduce a new rule requiring firms to take reasonable steps to ensure that such communications do not take place on private communication equipment which firms cannot record mainly for privacy reasons. This includes private mobiles, private handheld mobile electronic communication devices as well as and private non-mobile electronic communication devices.

The tone of the consultation paper is clearly towards implementation of rules covering mobile devices in the very near future.

With TextGuard, you can easily implement a complete mobile compliance solution to comply with these requirements.

MiFID

The Markets in Financial Instruments Directive (MiFID) as subsequently amended is a European Union law that provides harmonized regulation for investment services across the 30 member states of the European Economic Area (the 27 Member States of the European Union plus Iceland, Norway and Liechtenstein). The main objectives of the Directive are to increase competition and consumer protection in investment services. As of the effective date, 1 November 2007, it replaced the Investment Services Directive.

MiFID is the cornerstone of the European Commission’s Financial Services Action Plan whose 42 measures will significantly change how EU financial service markets operate. MiFID is the most significant piece of legislation introduced under the ‘Lamfalussy’ procedure designed to accelerate the adopting of legislation based on a four-level approach recommended by the Committee of Wise Men chaired by Baron Alexandre Lamfalussy.

According to the MiFID all electronic communications in regards to securities orders must be recorded. These recordings have to be safely stored for three years before deletion. Additionally these records need to be in an accessible format and readily available to the MiFID for inspection.

The term “electronic communications” in this instance applies to all faxes, emails, text messages, Bloomberg mail, video conferencing, business to business communication devices, as well as instant messages and chat rooms. It also includes any new method of electronic communication that may used in the future.

With TextGuard’s solutions in place your employees can communicate via mobile while your business operates within compliance regulations.

GLBA

Becoming fully effective in July 1, 2001 the Gramm-Leach Bliley Act is directed towards protecting the rights of individuals in regards to their personal financial information. Companies that deal with financial services, insurance, tax preparation, banking, consumer credit reporting and brokering fall under the jurisdiction of the GLBA. Violations of the Act can result in significant fines of up to $100,000 plus the possibility of jail time.

Highlights of the GLBA:

  • Section 6801 – Organizations must ensure the security and confidentiality of all customer records and information.
  • Section 6801 – Access to all customer records must be carefully controlled to prevent substantial harm or inconvenience to any customer.
  • Storage locations containing sensitive customer information must be protected by strong access controls and secure passwords.
  • Section 6801(b)(1) – companies must ensure that email messages are kept secure and encrypted when being transmitted over a link.
  • Sensitive customer information must be protected in case of physical disaster or technological failure.

Offering a complete mobile communication compliance solution, TextGuard has you covered.