Many say that the proliferation of digital messages, such as emails, text messages, and social posts, has made our lives easier. However, for chief compliance officers, the exponential growth of digital content presents a significant challenge in managing digital messages to meet regulatory requirements.
Indeed, the severity of the issue is underscored by the frequent headlines about the SEC imposing substantial fines on firms for their inability to capture, monitor, and archive digital messages. In the past year alone, the SEC's fines exceeded a staggering $1.8 billion, a testament to the widespread and longstanding failures by firms and their employees to maintain and preserve electronic communications, particularly text-based messaging[1].
Integrating Digital Channels
Our recent whitepaper, Enhancing Regulatory Requirements – Innovation in Email and Social Media Monitoring for Financial Advisors and Clients, details that “Under the SEC’s Investment Advisor Act of 1940, advisory firms must monitor and review ‘all written communications’ from advisors to clients to ensure they are not violating regulations or a firm’s code of ethics. As digital communications have increased, regulators have expanded the definition of ‘written communications’ to include all electronic channels, from emails to texts to social media, even embedded video and ‘chats’ on platforms such as Microsoft® Teams or Slack.”[2]
Regulators' insistence on comprehensive communications reviews is not without reason, as they aim to uncover fiduciary negligence, misleading statements, and improper representation of past performance. For compliance professionals, the challenge lies in the vast volumes of digital content from advisors and their clients. Failure to find new ways to leverage technology could lead to regulatory actions, negative PR, and costly fines, underscoring the need for proactive measures.
The Challenges Firms Face
Unfortunately, many advisory firms have difficulty sourcing industry-specific solutions to manage their digital communications compliance mandates. The key issue is that a system must be connected to underlying brokerage and custodial data to be effective.
What is needed is a "connected view" that presents problematic emails or text messages with context to determine if there is a potential issue. This context comes from the investor's trading history, positions, and account details, which can only be provided if the system is connected to the firm's portfolio management and reporting systems and the underlying custodial data. This added capability could vastly simplify and streamline compliance officer’s work while improving their effectiveness.
Black Diamond DMS
SS&C's Black Diamond® Wealth Platform addressed this pressing issue. The new Black Diamond Digital Message Surveillance (DMS) solution integrates custodial data into a compliance module. The highly customizable and comprehensive feature within DMS supports analyzing and archiving all emails, text, social media, Black Diamond in-app messages, and prospect communications, providing a purpose-built compliance tool that can effectively manage the increasing volumes of digital messages.
DMS provides compliance professionals in the wealth management space with a purpose-built compliance tool to better manage their ever-increasing volumes of digital messages.
To learn more about this pressing issue, download our latest whitepaper, Enhancing Regulatory Requirements – Innovation in Email and Social Media Monitoring for Financial Advisors and Clients.
To learn how the SS&C Black Diamond Wealth Platform can support the unique needs of your advisory firm, request your personal demo, call 1-800-727-0605, or email info@advent.com.
[1] https://www.sec.gov/news/press-release/2023-149
[2] FINRA, SEA Rule 17a-4 and Related Interpretations, February 23, 2023, SEA Rule 17a-4 and Related Interpretations | FINRA.org
