Patterns of Noncompliance

After just a few minutes perusing the press releases posted on FINRA’s website, you start to notice a pattern. The pattern is this: financial organizations—even major institutions—are not doing all they should to maintain compliance. Stories that frequently make FINRA's headlines (and the headlines of various news publications covering financial news) involve financial professionals failing to maintain secure and properly documented communication systems—for which they are fined heavily.

Incovenience and Cost: Why Financial Professionals Remain Noncompliant

On the one hand, it’s easy to see why this is the case. Financial professionals want to get their work done quickly and efficiently, and there’s a perception that regulatory safeguards like secure email and journaling make sending emails or instant messages unnecessarily clunky. And sure, there are times when the safeguards may slow down the flow of communication, despite best efforts to streamline and coordinate them. And then, of course, there’s the issue of cost. Proper safeguards cost money, and some financial professionals may see them as cutting into the bottom line.

Why Compliant Systems Are Worth The Investment

On the other hand, the stakes are awfully high for not being compliant. Just this last year, one major financial advisory firm was fined $9 million for failing to properly retain email communications. Another was fined nearly $4 million just weeks ago for not having proper electronic storage for email and instant message communications. Granted, these large organizations are likely not in any immediate danger from FINRA's actions; they have the margin to pay these fines, hurt as they might. But smaller companies do not have such margins; fees will hurt more and may even have disastrous implications for the future of smaller companies.

That's why small and mid-sized financial organizations, especially, need to bear in mind the consequences of not investing in and consistently using the safeguards dictated by regulatory bodies like FINRA and the SEC. Yes, at times safeguards may slow them down, but loss of productivity can be minimized by smart workflow implementation performed by technology experts who understand your needs. Digital communication has changed the way the financial industry works, no doubt. But this change brings risks with it, and risks must be managed.

Don’t find yourself listed in FINRA’s press releases. 3n1media has proven experience helping financial professionals achieve and maintain compliance with industry standards. Contact us if you'd like help. We can work with you to formulate a plan that is doable and not overwhelming to your workflow.