The document outlines the importance of email compliance for investment advisers and broker-dealers, emphasizing the need for effective supervision of electronic communications in order to meet regulatory requirements set by organizations like SEC and FINRA. It categorizes risk areas that require supervision, including performance advertising, safeguarding confidential client information, anti-money laundering, and conflicts of interest. Additionally, rules and best practices for managing captured email are discussed, alongside considerations for compliance and documentation.

2. Email Compliance 201
Managing Captured Data
Presented by
Core Compliance & Legal Services, Inc.
February 19, 2009

3. Introduction
• Why This Is Important
• Recap: “Electronic Communications 101:
Fundamentals of Regulatory Requirements”
• Where to Begin
• Risk Area Categories Requiring Email
Supervision
• Rules of Thumb on Managing Captured Email
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4. Why This Is Important
• SEC and FINRA require investment advisers
and broker-dealers to supervise business
activities
• Fiduciary duty/best interest of the client
• Current regulatory climate/recent events
• Trend toward more disclosure, transparency
and due diligence
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5. Recap: Regulatory Requirements
For Broker-Dealers
• Overview of FINRA rules
– FINRA Rule 3010 Supervision
– Securities Exchange Act 1934 17a-3 & 17a-4
– Notice to Members 07-59
• FINRA Expectations
– Flexible risk-based approach
– Content and target audience of the e-mail or IM
– “Legible, true, complete, and current” records
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6. Recap: Regulatory Requirements
For Investment Advisers
• Overview of SEC Rules
– Investment Advisers Act Rule 204-2
• SEC Expectations
– Risk-based approach
– Have effective policies and procedures for
electronic communication
– Safeguard records from unauthorized access
or destruction
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7. Where to Begin
• Review your firm’s customizable list of words
and phrases
• Recognize any areas of high risk which may
require special attention
– New hires
– Heightened supervision of personnel
– Communications between various departments
within the business unit
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8. Risk Area Categories
Requiring Email Supervision
• Performance Advertising and Marketing
• Safeguarding Confidential Client Information
• Anti-Money Laundering
• Conflicts of Interest/Insider Trading
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9. Performance Advertising and Marketing
• Investment Advisers Act of 1940 Rule 206(4)-1
Advertisements by Investment Advisers
– Prohibits fraudulent, deceptive, or manipulative
advertising practices
• FINRA Rule 2210 Communications with the
Public
– Prohibits false, exaggerated, unwarranted or
misleading statements or claims
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10. Performance Advertising and Marketing
• Examples of what to look for:
– Emails from sales discussing performance
returns without disclosures or compliance
approval
– Inclusions of projections/predictions,
testimonials and charts/graphs
– References to any past specific
recommendations
– Balanced discussions of risk/reward
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11. Safeguarding Confidential
Client Information
• Privacy of Consumer Financial Information
(Regulation S-P)
– Safeguarding confidential client information
– Mandates privacy measures of all financial
services firms
• State laws govern
– California SB1 Financial Information Privacy Act
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12. Safeguarding Confidential
Client Information
• Examples of what to look for:
– Social Security/Driver’s License
Numbers/Birthdays
– Emailed completed New Account Forms
– Authorized recipients of sensitive and
confidential client information
– Client account information such as current
income, assets, and investments
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13. Anti-Money Laundering
• Federal law requires financial institutions to
develop and implement an Anti-Money
Laundering (AML) Program which includes:
– Policies and procedures and internal controls
– Designation of an AML Officer
– Annual independent testing of AML compliance
– Ongoing employee training
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14. Anti-Money Laundering
• Examples of What to Look For:
– Wire transfers information
– Emails to and/or from client services or new
accounts containing identifying information
– Discussions of transactions involving off-shore
or international accounts
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15. Conflicts of Interest/Insider Trading
• Insider Trading and Securities Fraud Act of
1988
• Remember: Investment Advisers and Broker-
Dealers are required to act in best interest of
the client
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16. Conflicts of Interest/Insider Trading
• Examples of what to look for:
– Emails between the research analysts and the
trading desk
– Emails making recommendations and
compensation arrangements for the benefit of
the adviser/representative
– Emails containing sensitive confidential
information sent from the firm to a third party
outside the firm
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17. Rules of Thumb on
Managing Captured Email
• Spot and troubleshoot any loopholes
– Too little data captured? Too much?
• Ensure that your list of words and phrases fits
the nature of the business (e.g., firm size,
business activities) and keep the list
confidential!
• Verify that escalation procedures are being
followed
• Test the adequacy and effectiveness of back-
up tapes/hard drives
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18. Rules of Thumb on
Managing Captured Email
• Document the review—merely
capturing/opening email is not enough!
• Keep your email supervision system up-to-
date and in compliance with the latest
regulatory requirements
• Devise a system to delegate and supervise
email review if needed—keep in mind the
supervisor maintains ultimate responsibility!
• Take advantage of your third-party service
provider for guidance
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19. Questions?
• Please contact us if you have any
additional questions
– Core Compliance & Legal Services, Inc.
Tel: (619) 278-0020
Email: christina.rovira@corecls.com
Website: www.corecls.com
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20. Email Compliance 201
R. Anthony Seyboth
2.19.09
No Hardware No Software No Waiting
www.liveoffice.com Slide 20

21. Overview: Experience
The leading provider of email compliance solutions
Who We Are What We Do Who We Serve
 $22M in revenue  Archiving  20K successful audits
 Founded in 1998  Compliance  99% client retention
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 100+ employees  Continuity  Financial svcs focused
 Profitable  Hosting  10,000 clients
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www.liveoffice.com Slide 21

22. LiveOffice AdvisorMail Difference
• Automatically captures all sent and received messages
Archive • Offers unlimited storage & retention
• Protects messages in redundant data centers
• Scans all messages for keywords & phrases
• Provides random sampling of messages for rapid review
Review • Comprehensive reporting features to satisfy
requirements
• Complies with state & federal requirements
(SEC/FINRA/SRO)
Comply • Offers end-to-end audit support
• Provides peace of mind having passed 20K audits
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23. LiveOffice Difference
Meet
Requirements Archive Review Comply
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24. Thank You!
Meet
Trust Guaranteed
Requirements
R. Anthony Seyboth
Director, Compliance & Litigation Services
800.374.2032 X 117
anthony.seyboth@liveoffice.com
No Hardware No Software No Waiting
www.liveoffice.com Slide 24