SEC Risk Alert Regarding Internet Searches

With our ever-increasing dependency on the internet to do business, the SEC's Division of Examinations issued an “Risk Alert” pertaining to the various forms of electronic messaging. These can include social media sites, YouTube, Yelp, blogs, articles, websites, and more, used by advisers for business-related communications. These activities require supervision which are often time consuming, and often done as manual internet searches. These electronic messages present added challenges for supervisors in complying with certain provisions of the Investment Advisers Act of 1940.

​The Division of Examinations specifically mentioned three main areas for supervisors to address and encouraged firms and advisers to review their risks, practices, policies, and procedures regarding electronic messaging and to consider any improvements to their compliance programs that would help them comply with applicable regulatory requirements.

“Running regular Internet searches or setting up automated alerts to notify the adviser when an employee’s name or the adviser’s name appears on a website to identify potentially unauthorized advisory business being conducted online.”

With countless pages on the internet, where do you find the time to search and find your advisors online presence?
​
Are you are utilizing a manual “Google” internet search?

Do you get automatically notified when an advisor’s name appears on a website?

Our Eagle Eye application is the leading-edge solution to help you find your advisors’ online footprint. Designed with built-in intelligence that searches the internet and sifts through the clutter bringing only the most relevant results to your attention.

​With our “Risk-Based Review Process”, one reviewer can supervise hundreds to thousands of advisors in very little time. Learn More

​“Regularly reviewing popular social media sites to identify if employees are using the media in a way not permitted by the adviser’s policies. Such policies included prohibitions on using personal social media for business purposes or using it outside of the vendor services the adviser uses for monitoring and record retention.”

​Currently most social media monitoring systems rely on the honor system. Firms depend on their advisors to tell them about their use of social media. How do you protect your firm if your advisors are not so forthcoming? With billions of active users on social media daily, how do you find that Twitter handle, YouTube Channel, or that Yelp listing, that is going unsupervised? 

Our Eagle Eye’s multi-query processes and dynamically designed algorithms can help you find this social media presence. Our risk-based approach to the workflow process has added system intelligence, enhanced lexicon capabilities, system learning, allowing Eagle Eye to automatically discover your riskiest advisors and alert your attention to where it’s needed. With Eagle Eye’s automated documentation, you will have everything you need including when a result was found, who reviewed it, comments that were made, and timestamps on every action taken on the account. Learn More
​

​“For advisers that permit use of … personal websites for business purposes, contracting with software vendors to (i) monitor the social media posts, emails, or websites, (ii) archive such business communications to ensure compliance with record retention rules, and (iii) ensure that they have the capability to identify any changes to content and compare postings to a lexicon of key words and phrases.”

Our SQWatcher application is a web-based solution that automatically tracks, monitors, and archives your firms’ and advisors’ websites keeping you compliant. SQWatcher will identify and notify you of changes to website content and it has lexicon capabilities. This industry leading application brings you years of experience when it comes to web crawling, archiving and website analysis. Learn More
​
The Division of Examinations encouraged firms to “consider any improvements to their compliance programs that would help them comply with applicable regulatory requirements.” The innovative applications from SiteQuest Technologies bring great improvements to any firm’s compliance program.

The Division of Examinations also encouraged advisers to stay abreast of evolving technology and how they are meeting their regulatory requirements while utilizing new technology. With the ever changing online platforms, trust a company with over 15 years of experience in providing leading-edge compliance and supervision applications, and website solutions for the financial industry. Over 40,000 advisors online presence is being tracked with Eagle Eye today. Contact us today to discuss the compliance issues you are facing when it comes to internet searches, the SEC, and the Investment Advisers Act of 1940.

Source: OCIE Risk Alert (reference page 4)

Related Articles:

• Trends When it Come to Supervising the Web
• High Risk Brokers; What Are You Doing About Them?
• ​Known Compliance Gaps