SEC Archives

FINRA Record Retention Requirements Checklist

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for securities firms doing business in the United States. FINRA’s purpose is to protect American investors by making sure the securities industry operates fairly and honestly. FINRA has regulatory oversight over all securities firms that do business with the public.

We’ve compiled a short-list of the various requirements mandated by FINRA concerning record requirements. For a full description of each requirement, please visit FINRA’s web site or click on this link to see the entire record-keeping checklist:

Memoranda of Brokerage Orders and Dealer Transactions

Record Retention: Three (3) years, the first two years in an easily accessible place.

Associated Person Location and Identification Number Records

Record Retention: Three (3) years after the associated person has terminated employment and all other connections with the firm.

Associated Person Compensation Records

Record Retention: Three (3) years, the first two years in an easily accessible place.

Associated Person Complaint Records

Record Retention: Three (3) years, the first two years in an easily accessible place.

Customer Account Records

Record Retention: Six (6) years after the closing of the account or the date on which the information was replaced or updated, whichever is earlier.

Filetwin Commentary: It’s important to note here that it states “after the closing of the account”. If a customer remains a customer for five years, then the Broker would be required to hold that record for the five years that the customer was a customer and then six (6) years thereafter. In effect, that record would have a retention lifespan of eleven years.

Communications Supervision Records

Record Retention: Three (3) years, the first two years in an easily accessible place.

Contact Person Records

Record Retention: Six (6) years, the first two years in an easily accessible place.

Responsible Principal Records

Record Retention: Six (6) years, the first two years in an easily accessible place.

Office Records

Record Retention: For the most recent two (2) year period.

Communications with the Public

Record Retention: Three (3) years, the first two years in an easily accessible place.

Organizational Documents

Record Retention: Life of the enterprise and of any successor enterprise.

Filetwin Commentary: If certain documents need to be retained for an indefinite period of time, it only seems prudent to maintain a retention that stores all digital records indefinitely. In the digital world, the cost of storage is dropping so holding larger amounts of records is becoming more cost efficient.

Special Reports

Record Retention: Three (3) years after the date of the report.

Compliance, Supervisory & Procedures Manuals

Record Retention: Three (3) years after the termination of use of manual.

Exception Reports

Record Retention: Eighteen (18) months after the date the report was generated.

As you can see, certain documents require different retention policies. The longest period being six years – with the exception of the Organization documents. It’s our belief that Brokers should set their overall retention period for six (6) years. With Filetwin software, specific files can have specific retention periods set so you could create rules to match the above requirements, however, the SEC even recommends that files should be retained indefinitely. If you’d like to continue this conversation with one of our U.S. based Backup Specialists, please feel free to contact us 1 877 310-2884.

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Backup for FINRA and NASD

If you found this blog post from a Google search and are interested in learning more about record retention and online backup, then you’ve come to the right place. Chances are, you’re evaluating several vendors and so you should. FINRA and NASD must follow rules 17a-3 and 17a-4, however, these rules can be widely open to interpretation. For example, here’s a link http://www.finra.org/Industry/Regulation/Guidance/InterpretiveLetters/p005323 from FINRA’s Assitant General Counsel explaining optical storage technology (“OST”) and its exclusive use. We’ve also included a link to the Office of the General Council at the S.E.C. in case you need more information after reading our Blog. Also, here’s the link to a PDF of the S.E.C. amendment to the Broker/Dealer Record Retention Rule.

So here’s a summary in simple to understand terms:

1. There was some confusion about the third party rule but the language in the requirement stating that the requirement applies to brokers/dealers “that use OST exclusively”, was not intended to imply that a broker/dealer would only need to have arrangements with a third party if it were using OST exclusively for all records.

If you use electronic storage or OST for only one category of records, then you must still satify the third party download provider requirement of the rule.

So whether you’re using OST for only one category OR for your entire office – you need to satisfy the requirement.

2. W.O.R.M. – This means WRITE ONCE; READ MANY. Basically, if you burn data to a CD and no one can erase or overwrite the content then you’ve satisfied the intent of this requirement.

Here’s the link to the Optical Storage Technology Association in case you want a better clarification or definition as to what OST really is.

In summary, we understand that these requirements and regulations can be a bit confusing so if you want to speak directly with someone who can help guide you through this maze of regulations, then please contact us directly at 1 877 310-2884. One of our Backup Specialists will be pleased to assist you. We are proud to report that our Sales and Support Teams are located in the U.S. Help revive our economy and keep your backups in America.

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Chances are that if you stumbled upon this Blog and were looking for companies who can help you satisfy the intent of the S.E.C. regulations then you’ve found the right resource. After all, you and your business are resourceful, so shouldn’t you be using the right resources?

Of course you should. But what, pray tell, is the right solution to deal with the W.O.R.M. requirement and the third party requirement? Well the WORM requirement – Write Once; Read Many – specifies is that once a document has been created and stored, it cannot be edited in any way. Our backup solution accomplishes this because once you’ve stored a file, it’s locked up and cannot be edited. If a staff member attempts to delete it, the administrator will be notified that there was an attempt to delete a file and also inform them who was responsible for that action. Also, we offer Version Control which keeps each version of a file regardless of how many times the file was edited.

Regarding the Third Party Notification, we can assist with that as well. Once you’ve installed the trial, we will create a draft of the letter which we will mail to the SEC offices in Washington DC. You will have a chance to review the draft prior to us mailing it. We’ve done this for several of our clients so if you’re looking to get compliant fast, then give us a call at 1 877 310-2884 and one of our Backup Specialists will be pleased to continue this discussion with you.

Have a great weekend!

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