Memo #
21355

Institute Comment Letter on NASD/NYSE Proposed Guidance Relating to the Supervision of E-Communications
| Print

 

 

[21355]

 

July 12, 2007

TO: SEC RULES MEMBERS No. 82-07
TECHNOLOGY ADVISORY COMMITTEE No. 20-07
COMPLIANCE MEMBERS No. 34-07
BROKER/DEALER ADVISORY COMMITTEE No. 33-07
SMALL FUNDS MEMBERS No. 54-07 RE: INSTITUTE COMMENT LETTER ON NASD/NYSE PROPOSED GUIDANCE RELATING TO THE SUPERVISION OF E-COMMUNICATIONS

 

As we previously informed you, [1] the NASD and NYSE solicited comments recently on proposed guidance regarding a member’s responsibility for reviewing and supervising electronic communications.  Attached is the comment letter the Institute filed today on the proposed guidance.  The Institute’s letter supports the proposed guidance and notes that it should benefit members as they consider which new technologies to deploy and how to accommodate them into their supervisory policies and procedures.  Additionally, the guidance should help resolve some uncertainty in the industry resulting from a recent enforcement proceeding involving a broker-dealer’s failure to reasonably supervise its 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 communications drafted by certain compliance or senior personnel of the member may be excluded from supervisory review; and
  • What constitutes acceptable evidence that a member reviewed a communication.

The letter discusses each of these recommendations in detail.

 

Tamara K. Salmon
Senior Associate Counsel

Attachment

endnotes

 [1] See Institute Memorandum to SEC Rules Members No. 65-07, Compliance Members No. 26-07, and Small Funds Members 43-07 [No. 21296], dated June 20, 2007 or 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.