FINRA Compliant Document Storage & Management
The Financial Industry Regulatory Authority (FINRA) helps maintain fair financial markets and protects the investing public from fraudulent schemes. FINRA’s regulation typically applies to broker-dealer firms, funding portals, and capital acquisition brokers. FINRA works alongside the Securities Exchange Commission (SEC) to aid in regulating the brokerage industry. Part of their regulation allows them to create rules regarding the storage of sensitive documents. FINRA develops clear rules for these documents, and failing to follow them could lead to severe penalties for the guilty party. SeraScript is the solution.
Understanding FINRA Rules
FINRA has outlined a few rules that impose specific requirements on how brokerages store information. Among these rules are:
Enforceable Retention Policies
SEC Rule 17-3 states that documents need to be adequately retained and that the process for document retention should be fully documented, easily accessible, and actionable. While this should be implemented throughout the financial services industry, this regulation ensures that brokerages meet this basic standard. The implementation of this standard will also improve the brokerage's workflow.
Data Must Be Readily Viewable and Retrievable
If a brokerage has data stored on its servers, but it can't be viewed, then it's as good as garbage data. One of the stipulations outlined by SEC Rule 17a-4 is that this data needs to be retrievable by the brokerage, and the files must be viewable. This means that all documents stored by the institution should be readable by anyone else who wants to do so. In the case of investigations, this stipulation ensures that all data can be used in prosecuting wrongdoing.
Data Must be Backed Up Off-Site
The biggest issue with digital storage is that the data is lost forever if the media fails. The SEC rules consider this when outlining guidelines. Sensitive data must be stored in an off-site backup that can be retrieved if the company's servers go down. This off-site backup also keeps the business in compliance with other governmental agencies.
Data Must be Searchable Via Index
When data is stored on digital media, it can snowball. Indexing allows for a faster search system that is crucial when dealing with sensitive information like customer records. The searchable index makes for a more efficient operation of the brokerage and ensures that issues can be tracked and remedied as they show up.
Penalties for Non-Compliance
FINRA doesn’t take lightly to companies flouting the rules. The financial cost of non-compliance isn’t something that brokerages consider until they run afoul of the regulations. In previous cases, FINRA levies fines on offending institutions ranging from $800,000 to $3 million. FINRA also has the ability to ban a brokerage from doing business in trading as a result of ignoring the rules and regulations the authority has set forth.
How SeraScript Ensures FINRA Compliance
Institutions that need to conform to the FINRA rules are in luck since SeraScript offers solutions that they can count on. Among the things that SeraScript offers as part of their services include:
- A full-text search system provides an easily accessible and indexed copy of all documents.
- By integrating blockchain technology, SeraScript has ensured that the data stored is immutable, following the SEC's regulations on Write-Once-Read-Many (WORM) file storage.
- Data retention is guaranteed by blockchain integration since all data stored on the chain is accessible in perpetuity.
- Robust security in the form of two-factor authentication (2FA) makes for guaranteed safety for all stored records.
- Custom organization tools ensure that the data stored on SeraScript can be indexed by custom tags and fields, making for better organization and searchability of data.
- Multiple data centers meet the requirement for off-site storage. Users can access data from the most convenient data center, and multiple centers add reliability through redundancy.
Why Choose SeraScript?
Meeting the requirements set forth by the SEC and FINRA doesn’t have to be complicated. Simple solutions tend to work best, and SeraScript provides all the things an institution needs in its document storage to ensure it meets SEC and FINRA rules. Why invest thousands into a system that could fail and leave the company in breach of the rules? The safer and more economically efficient solution is SeraScript. Contact us today to find out what we can offer to your business.
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