SEC Amends How Broker-Dealers Preserve Electronic Records

The Securities and Exchange Commission (“SEC”) voted to adopt amendments to the electronic record-keeping, prompt production of records and third-party record-keeping service requirements. The amendments will align record-keeping requirements with current technological developments to modernize how broker-dealers (“BD”) preserve electronic records.

Current electronic record-keeping rules require a BD to preserve electronic records in write once, read many (“WORM”) format.  The new amendments will add an “audit-trail alternative under which electronic records can be preserved in a manner that permits the recreation of an original record if it is altered, over written, or erased” according to the SEC. The new audit trail amendment is designed to allow BDs more flexibility in establishing electronic record-keeping systems while also protecting the authenticity of the original record.

The SEC amendments will facilitate the examination process by requiring BDs to produce electronic records in a “reasonably useable electronic format,” the SEC noted. The adopting release will be published on SEC.gov and in the Federal Register. BDs must comply with new requirements six (6) months after publication in the Federal Register.

To see the full Press Release, click here.