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4 Reasons it Pays to Comply with FINRA & SEC Recordkeeping Laws

Complying with your industry's record keeping regulations may seem like a given; yet stories of non-compliance continue to circulate in the news. Unaware of the significant harms of failing to meet regulations, many organizations are overlooking compliance as a major priority. Let's take a look at a few reasons why compliance should always sit at the top of your organization's priority list, and the costs you can avoid by doing so.

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  1. FINRA fines are on the rise
    FINRA fines are on the increase and show no signs of slowing down. FINRA reported 99 books and records cases in 2016, resulting in $22.5 million in fines. This marks a 423% increase compared to 2015. In 2016, FINRA’s general fines hit a record high of $176 million, an increase of 87% from the $94 million reported in 2015.

  2. Risk of audits and prosecution by authorities
    Whether through reasonable doubt or random selection, any firm can be at risk for undergoing an audit by FINRA and the SEC and have employees be personally prosecuted for their actions. We've gathered some shocking numbers to portray just how many organizations are overlooking the law. 

    In December 2016, FINRA fined
    12 firms a total of $14.4 million for significant deficiencies relating to the preservation of broker-dealer and customer records in a format that prevents alteration.

    Examples of non-compliance fines:

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    Wells Fargo Securities, LLC + Wells Fargo Prime Services, LLC - $4 million
    Failed to maintain 350 million electronic brokerage records in WORM format

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    RBC Capital Markets LLC and RBC Capital Markets Arbitrage S.A - $3.5 million
    Failed to maintain 172 million electronic brokerage records in WORM format

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    RBS Securities Inc - $ 2 million
    Failed to maintain 14 million brokerage records in electronic records in WORM format
    Wealth Forge Logo_0.png
    WealthForge, LLC - $20,000 
    Failed to use an adequate supervisory system that captured, reviewed and retained social media communications used by its representatives.

  3. Substantial reputation & relationship risks

    Financial services firms can suffer huge reputation risks, poor publicity and loss of shareholder trust and business if publicly fined or prosecuted for lack of compliance. This trust is extremely difficult to re-gain if at all possible.
  4. Compliance is not optional, it’s a must

    No organization is exempt from the legal and regulatory demands to store their online data in an effective and reliable form. Addressing this heavy usage, FINRA, SEC, FFIEC and FCA regulatory notices concerning web and social media sites explicitly state that firms must retain records of all business-related electronic communications to remain compliant with their regulations. Below are some key regulations all financial services organizations must comply with. 

    - Rule 17a-3 and Rule 17-a4
    - Rule 17a-4(b)

    - Rule 4511
    - Regulatory Notice 10-6 and 1139

    Learn more about these rules here 

    Compliance not a one-time event, but an ongoing and proactive process. Take compliance matters into your own hands when you use website archiving and social media archiving software.

    Find out how PageFreezer helps financial service organizations comply with FINRA and SEC requirements. 

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