Andrew Gluck

ContactAndrew Gluck is a veteran financial reporter and the founder and CEO of Advisor Products Inc., a marketing company serving 1,800 financial advisory firms.
read more ...

Advisor Products Inc.

Registered Reps With Their Own Independent RIA Must Keep Their Own Email And Social Media Archives In Addition To Their Broker-Dealer's Records edit
Wednesday, June 06, 2012 13:17

Tags: breakaway brokers | broker-dealers | compliance | FINRA | sec | Social Media

Dually-registered investment advisor representatives with their own RIA must keep their own social media and email archives. Even if your broker-dealer is keeping social and email archives for you, you must keep your own archives of these communications if you own an RIA independent of your BD.

This Website Is For Financial Professionals Only


 
If you are an IA rep affiliated with a broker-dealer’s RIA, which is sometimes called a corporate RIA, then the BD can keep these records on your behalf. However, if you are an IA rep at an RIA that you own, then you must keep your own archive of written communications and advertising related your investment advice activities. Relying on your BD’s email and social media archiving system is not enough.
 
The RIA recordkeeping issue came up at a FINRA conference a couple of weeks ago. Julie Riewe, an assistant director in the asset management unit of the SEC enforcement division, told the audience that registered reps with their own RIAs were responsible for fulfilling the RIA recordkeeping requirements on social media even if their BDs are keeping those records.
 
Craig Brauff, founder and CEO of Erado Message Control Solutions, attended the session where Riewe explained the rules and told me about Riewe’s comments, and I spent some time this week trying to track down a regulator who would go on the record verifying what Riewe said. SEC officials would only speak on background on the issue, however, in keeping with the agency’s history of not speaking about the specifics of how RIAs fulfill their obligations under the law.
 
If a dually registered advisor with his own RIA is relying on a BD’s email and social archiving system, the RIA is still obliged to maintain those email and social media records. If the BD were to close its doors, the RIA would still be responsible for providing emails and social media communication related to the RIA activities.
 
Some BDs could work out an arrangement with their registered reps where they would contractually provide an independent RIA with its archives on a semi-annual or annual basis, thus enabling the RIA to fulfill its recordkeeping requirement. If not, an RIA will probably want to separately keep an archive of its investment advice related social and email communications.
 
There are many ways for dually-registered RIAs to fulfill their recordkeeping requirements. They could, for instance, establish a separate email account at Google or someplace else and always use that account for investment advice communications, or you can print all RIA-related email and social communications. The possible solutions are many, which is why the SEC rarely speaks on the record about fulfilling the requirements. As a practical matter, however, most dually registered RIAs will likely want to use a dedicated email and social compliance solution because keeping separate email accounts or printing can be cumbersome, time-consuming, and cause confusion.     
 
Dually-registered advisors are those who are registered reps licensed to sell securities and who are also investment advisor reps affiliated with an RIA. They are regulated under two different regulatory regimes: RIAs are regulated under rules flowing from the Investment Advisers Act of 1940, while registered reps are regulated under the Securities Exchange Act of 1934.  
 
Dually registered advisors, also sometimes called “hybrids,” have become much more common in recent years because most brokers leaving wirehouses become IA reps and retain their securities sales licenses in order to continue to collect commissions and 12b-1 fees.

 

Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.

busy
 

Login

Banner
Banner
Banner
Banner

Comments

Banner
Banner
Banner
Banner
Banner
Banner