SEA Rule 17a-4

SEA Rule 17a-4 Compliance Services

2017 Regulatory and Examination Priorities Letter

In its 2017 Regulatory and Examination Priorities Letter, FINRA informed firms that its 2017 cycle examinations would include a review of B/D compliance with the requirements of SEA Rule 17a-4. FINRA stated, “in multiple instances, firms have failed to fulfill one or more of their obligations under Securities Exchange Act (SEA) Rule 17a-4(f) that requires firms to, among other things, preserve certain records in a non-rewriteable, non-erasable format, commonly known as write once read many (WORM) format.”

Since 2007-2008, B/Ds have generally satisfied Rule 17a-4’s requirements pertaining to the archiving of emails. Until recently, however, it was difficult to find a cost-effective, WORM storage system for a B/D’s static files (PDF, Excel, Word, etc.). As shown below, cost-effective and fully compliant archiving services are now available through reputable providers including Amazon, Google, and Microsoft.

SEA Rule 17a-4

SEA Rule 17a-4(f) allows a B/D “to employ, under certain conditions, electronic storage media” to preserve its required books and records (Release No. 34-38245).

Rule 17a-4(f) has two main requirements:

  • Designated Third Party (“D3P”)
    17a-4(f)(3)(vii) requires a B/D to engage the services of “at least one third party…, who has access to and the ability to download information from the [B/D’s] electronic storage media.” To address this requirement, SIRS offers its D3P services. Through a contractual agreement, SIRS establishes access to the B/D’s records. For an annually renewable service charge of $500, SIRS’ staff will remain continually available to respond to regulatory requests for document retrieval services.

17a-4 Certifications Provided

Since 2007, SIRS has been a respected provider of SEA Rule 17a-4, D3P services. SIRS is listed in the FINRA Compliance Vendor Directory.

By subscribing to SIRS’ D3P services, you will receive the following:

  • Third-party Undertaking Letter
    Rule 17a-4 requires each B/D to file an undertaking letter, signed by its designated third party, with the B/D’s designated examining authority. SIRS will provide your firm with this signed undertaking letter.
  • Storage Media Representation Template
    This form provides the storage media representation required by 17a-4(f)(2)(i).

To comply with 17a-4’s electronic storage media requirements, a B/D must use FINRA’s Firm Gateway application to submit these two required filings.