1H’22 Roundup: Capture 100+ Channels and Expand Hybrid Work Environment Capabilities
The first half of the year has flown by quickly. Smarsh Capture now supports more than 100 channels, empowering Smarsh customers to better handle the impact of hybrid and remote work. At the same time, newly announced social media and collaboration solutions are enabling financial services firms to quickly respond to policies, procedures, and reporting requirements — key focuses of U.S. and EU regulatory bodies.
Major shifts in digital communications
According to Putnam, social media usage continues to grow in the financial services industry with 81% of financial advisors using it to engage or onboard their customers. However, at our recent SmarshCONNECT event, firms indicated that even with the increased regulator focus on social media and collaboration tools used for virtual work, many don't plan to lock down or expand their policies prohibiting the use of these channels. Why?
The pandemic was the tipping point, forcing companies to fully embrace digital communications across the organization. The benefits achieved included increased efficiency, productivity, and responsiveness to customers using social media platforms like YouTube or Reddit, collaboration tools like RingCentral, and messaging solutions like WhatsApp.
Employees and customers are dictating communication methods and where work takes place. The millennial and Gen Z customers and employees view social, messaging, and video as an integral part of how they communicate in their personal and professional lives. Customers and employees expect companies to embrace this technology.
Firms recognize that it's imperative to embrace new communication channels to remain vibrant and relevant and to retain employees in a tight hiring market.
Changing regulator priorities
It’s clear that the popularity of social media channels, end-to-end encrypted messaging, and unified communications tools like Microsoft Teams, Zoom, or Vidyard is increasing. Engagement across these tools can come at a high price for companies or individuals that fail to capture, monitor, supervise or surveil these communications.
- An insurance company was fined $4.75M for not supervising social media and trading activities of their employees
- The SEC fined a global financial services firm $200M for not capturing their WhatsApp mobile communications, violating SEC rules 17(a) for storage of content, 17a-(4)(b)(4), ease of accessibility to supply the records, and 17a-4(j) for not promptly furnishing the records to regulators
- A former investment banker was fined $37K pounds for deleting WhatsApp communications, violating the UK Financial Conduct Authority's (FCA) Market Watch 66 Act, which regulates collection of communications by investment bankers
New marketing rule
Even a firm’s chief marketing officer (CMO) and chief compliance officer (CCO) have to answer to the new SEC Advertising Rule (206(4)-1) for Registered Investment Advisors (RIAs). It replaces the existing advertising and cash solicitation rules and updates the rule to reflect the advancement of advertising technologies.
Using the latest social media channels is critical to raising a financial services firm’s visibility. These types of public communications are viewed as advertising and promotion, which fall under FINRA Rule 2210(b)(4)(A) and Rule 2210(c)(6), requiring retail and institutional firms to adhere to the recordkeeping requirements of SEC Rule 17a-4(b). FINRA also requires spot checks — periodic requests to selected groups of broker-dealers to submit communications that aren’t normally subject to the filing requirements — for review. (Guidance for the UK can be found in the Perimeter Guidance Manual from the FCA.)
The benefit vs. risk and cost analysis of non-compliance is no longer in firms’ favor. Regulators in 2022 are focused on social media, hybrid work communications tools, and updating their regulations for modern digital communications.
Check out the new channels Smarsh Capture supports and learn how to better protect your organization:
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Carla A. Fleming
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