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E-mail Archiving Done Right

Taking a look at Smarsh, Inc.'s total e-mail solution.

Joel P. Bruckenstein, 10/10/2007

Whether your firm is regulated by the state, the SEC the NASD, or a combination of the above, by now you are no doubt aware that laws and regulations impose an e-mail compliance burden on your firm. Under the NASD Books and Records Conduct Rule 3110, each member shall make and preserve books, accounts, records, memoranda, and correspondence. In a similar vein SEC Rule 17a-4 specifies that firms need to keep a secure archive of all business correspondence, including e-mail, for up to six years. Firms must take steps to ensure that business records, including e-mail, are protected against physical disasters, and that backups are available to restore lost primary data in the case of a disaster.

If the correspondent is a client, additional burdens are placed on the advisory firm. For example, correspondence cannot contain language that could be construed as misleading or inaccurate. If correspondence is classified as "advertising" under the regulations, it must be reviewed and approved before it can be sent to consumers. In addition, under the privacy regulations, advisors have a responsibility to maintain the privacy of their clients, so advisory firms have an affirmative duty to make sure only authorized parties can access stored e-mail records.

If your firm is publicly held, the Sarbanes Oxley Act of 2002 applies as well. The act requires publicly held companies to properly manage and maintain corporate records, and it may hold corporate officers and top managers criminally liable for failing to comply.

In today's legal and regulatory environment, maintaining good e-mail records is essential, but simply saving e-mail to disk might not be sufficient any longer. A more comprehensive approach is required. As a result, many financial advisory firms are turning to third-party providers to help them comply with e-mail requirements. Using a third-party provider can help simplify compliance, and implementation of a third-party solution can generally be achieved in a fraction of the time an in-house solution requires.

Using a third party to store and manage your e-mail can also help minimize challenges to an e-mail's authenticity. Authenticity challenges have become much more common in recent years. For those who wish to store their own e-mail, a number of firms, including ProofSpace and Xerox offer products that can help with authenticity issues, but by using a third party e-mail provider, firms may be able to largely avoid e-mail authenticity challenges.

Within the industry, there are several well-known providers of e-mail archiving services to financial advisors. These include AdvisorMail from LiveOffice and e-mail archiving from AdvisorProducts. Smarsh, Inc. is not nearly as well known within the advisor community, but it deserves to be.

According to Smarsh Vice President Steven Finnern, Smarsh "is committed to providing financial advisors with the best archiving, supervision and monitoring software on the market." Smarsh currently works with more than 2,000 firms, processing more than 10 million e-mails per month. The firm claims that more than 80% of their clients have experienced some sort of audit or examination, and all have "passed easily."

Smarsh e-mail archiving and monitoring is hosted solution. This means that all incoming, outgoing and internal e-mail, including attachments, is captured on Smarsh servers. Smarsh can provide monitoring and archiving of both instant messaging and Bloomberg messages/chats too. Firms can elect to have Smarsh host their e-mail servers, but this is not a requirement. Smarsh does, however, offer business quality POP, IMAP, and Microsoft Exchange hosting packages for customers that prefer an end-to-end e-mail solution.

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