2018 may be behind us, but there’s still time to learn valuable lessons from the key trends of the prior year. In a recent webinar, Robert Cruz, Senior Director of Information Governance at Smarsh, was joined by Mike Pagani, Smarsh Chief Evangelist, to discuss how the business communications landscape has evolved throughout the year, and what regulated organizations need to know going into 2019.
FINRA ramps up focus on high-risk brokers and misleading offers
In keeping with the priorities it outlined at the beginning of 2018, FINRA has begun employing enhanced scrutiny when it comes to high-risk firms and brokers in an effort to close any potential blind spots that may have concealed potential malfeasance in the past. Regulators are increasingly seeking evidence or proof of supervision from newer, post-email communication channels, such as social media, text messages, and collaboration platforms. Even cutting-edge channels such as encrypted and ephemeral apps are now fully under the microscope. FINRA is clearly sending a signal that there’s no channel that should not be monitored, because misconduct will inevitably be found.
Simultaneously, FINRA is reminding firms and brokers that they must create defensible processes for each communication channel they allow within their firm. If defensible processes can’t be created, those communication channels should be prohibited. However, this creates a paradox, as we all know that prohibition doesn’t work. The solution? Your firm must create defensible processes for all potential communication channels used by employees, backed by comprehensive Written Supervisory Policies (WSPs) capable of evolving to keep up with modern communications.
Mobile-friendly communication technologies grow ever-more popular
Business communications are moving away from the earthbound shackles of a desktop and into the highly-efficient and ‘always on’ mobile realm. Mobile devices are more capable and ubiquitous than ever before, and they offer users the ability to utilize a wide variety of communication channels instantaneously. Central to the adoption of rapid, mobile-friendly communication technologies are two key channels: Text and collaboration platforms such as Slack, Workplace by Facebook, and Microsoft Teams. According to Pagani, these post-email technologies combined with the untethered nature of mobile devices have empowered firms to get a lot done quickly, and to disseminate information as needed more easily.
However, all of those mobile communications, whether they be internal or external, are subject to regulatory scrutiny, and therefore must be supervised just as your firm would supervise email.
Consumer data protection laws strengthen throughout the world
Following numerous high-profile data breaches, consumers the world over are growing increasingly wary of the personal data companies have spent years collecting. In 2018, we finally saw legislative pushback. International regulations such as MiFID II and GDPR and local regulations like the California Consumer Privacy Act create penalties for companies that fail to offer enough transparency around the data they collect and maintain. This means that firms of all shapes and sizes have an even greater responsibility to protect the data they archive — and this trend is likely to continue. Robert Cruz predicts that 2019 may be the year we finally see nationwide consumer privacy legislation, and even if we don’t, it’s very probable that more states will follow the example set by California.
Key Takeaways going into 2019:
- FINRA and SEC are going to be increasingly selective about their targets; high risk brokers and firms utilizing post-email communications channels should expect enhanced scrutiny
- Information value and risk now span a wider spectrum of places to govern
- There’s a new premium on transparency as to how client data is being used, secured, and managed
Watch the full recorded webinar: A Year in Review: A Look Back At the Regulatory Compliance & Technology Trends of 2018.
A global client base, including the top 10 banks in the United States and the largest banks in Europe, Canada and Asia, manages billions of conversations each month with the Smarsh Connected Suite. Government agencies in 40 of the 50 U.S. states also rely on Smarsh to help meet their recordkeeping and e-discovery requirements.
The company is headquartered in Portland, Ore. with nine offices worldwide, including locations in Silicon Valley, New York, London and Bangalore, India. For more information, visit www.smarsh.com.
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