Institute Draft Comment Letter on NASD/NYSE Proposed Guidance Relating to the Supervision of E-Communications
[21312]
June 28, 2007
TO: SEC RULES COMMITTEE No. 54-07TECHNOLOGY ADVISORY COMMITTEE No. 18-07
COMPLIANCE ADVISORY COMMITTEE No. 12-07
CHIEF COMPLIANCE OFFICER COMMITTEE No. 16-07
BROKER/DEALER ADVISORY COMMITTEE No. 28-07
SMALL FUNDS COMMITTEE No. 24-07 RE: INSTITUTE DRAFT COMMENT LETTER ON NASD/NYSE PROPOSED GUIDANCE RELATING TO THE SUPERVISION OF E-COMMUNICATIONS
As we previously informed you, [1] the NASD and NYSE are soliciting comments on proposed guidance regarding a member’s responsibility for reviewing and supervising electronic communications. Attached is the Institute’s draft letter on the proposed guidance, which is briefly summarized below. The letter addresses each of the issues the Institute’s members raised in a conference call held on June 26th to discuss the proposal and the Institute’s comments.
Comments are due to the NASD and NYSE by Friday, July 13th. Please provide any comments you have on the draft by phone or email to Tami Salmon (202-326-5825; tamara@ici.org) or Frances Stadler (202-326-5822; frances@ici.org) no later than Friday, July 6th.
The Institute’s letter supports the proposed guidance. It notes that the guidance should benefit members as they consider which new technologies to deploy and how to accommodate them into their supervisory policies and procedures. Additionally, it should help resolve some uncertainty in the industry resulting from a recent enforcement proceeding involving a broker-dealer’s failure to reasonably supervise salespersons’ electronic communications.
The letter recommends that the final guidance clarify:
- That the guidance is not intended to expand members’ existing obligations to supervise communications, regardless of medium;
- What the guidance means when it states that members’ risk-based procedures to review electronic communications should “flag” certain communications;
- Whether client communications drafted by certain compliance or senior personnel of the member are subject to additional supervisory review; and
- What constitutes acceptable documentation that a communication was reviewed by the member.
The letter discusses each of these recommendations in detail.
Tamara K. Salmon
Senior Associate Counsel
endnotes
[1] See Institute Memorandum to SEC Rules Committee No. 52-07, Technology Advisory Committee No. 17-07, Compliance Advisory Committee No. 11-07, Chief Compliance Officer Committee No. 14-07, Broker/Dealer Advisory Committee No. 26-07, and Small Funds Committee No. 23-07 [No. 21289], dated June 19, 2007.