Capturing online comments for U.S. regulatory purposes is becoming a Canadian specialty.
A Vancouver provider of online computing services said it launched a system for capturing and storing social media and blog activity used by brokers and investment advisors, for compliance purposes. A separate Vancouver company dominates the archiving of email and instant message archiving for investments firms.
A cloud-based service from PageFreezer.com announced Tuesday will allow securities traders, registered representatives (RIAs), banks, and other financial firms to keep their social media activities recorded for review. This will allow the firms to abide by guidelines set by the Financial Industry Regulatory Authority (FINRA), which regulates brokers.
FINRA in 2010 advised brokers that social media content falls under regulatory requirements for record-keeping.
In the regulatory notice concerning blogs and social networking sites, FINRA stated that firms must retain records of all business-related electronic communications to remain compliant with Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934.
ThePageFreezer service will capture every aspect of a social media site: blogs and the comments within them, including Twitter feeds, Facebook, LinkedIn recommendations.
f "It's not just the large financial companies and institutions that need to consider their social networking activity from a compliance standpoint," said Michael Riedyk, Executive Director of PageFreezer. "The individuals in the financial sector -- investment advisors and the like -- must comply with their firm's retention policies.’’
Hedge funds also are stepping up their spending on archiving of Blackberry messages, general email, Bloomberg messages, instant messages and other new forms of online communication, according to Bob Guilbert, managing director of Eze Castle Integration, which conducted a study of 223 funds in the last half of 2010. The data was released last week.
The increase in spending on the archiving of messages comes in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The act, which is now being transformed into formal rules by federal regulators, says, for instance, that:
"Each organization shall maintain records of all activities related to the business of the facility, including a complete audit trail in a form and manner that is acceptable to the (Securities and Exchange) Commission; and for a period of not less than 5 years.”
As a result, investment firms are seeking technology that uses an archiving technology known generically as the WORM format, as in write-once, read-many. This is because it is a disciplined method of recording information, according to Mary Beth Hamilton, director of marketing for Eze Castle Integration, which acts as an information technology consultant to hedge funds, private equity firms and other investment companies. Original information gets written only once to a storage device, but can be read as many times as needed.
The Eze Castle survey found that an archiving system from Global Relay is the most commonly used by hedge funds and other so-called alternative investment firms.
In the survey, 61 percent of users of software for archiving email and instant messages said they rely on message capturing by Global Relay, also based in Vancouver, Canada, provider of email archiving and compliance products and services. Other widely used products include Symantec Enterprise Vault (7%) and Iron Mountain (5%), a storage service. Other providers included Advisor Mail, FrontBridge, i365, Intradyn, Message One and Seccas.
This story first appeared on the Securities Technology Monitor web site.
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