Staying Ahead of the Curve with Holistic Compliance Oversight

Ken Hall – 04/11/2024

Staying Ahead of the Curve with Holistic Compliance Oversight

In the rapidly evolving landscape of wealth management, staying ahead of regulatory changes and compliance requirements goes beyond adhering to rules—it's about strategically preparing your firm to navigate future challenges with confidence. With the SEC and FINRA tightening their oversight, the need for effective archival and supervision solutions has never been more critical. Modern compliance solutions play an integral role in this process, offering necessary tools to ensure adherence to the complex web of regulations and safeguarding firms against the reputational damage and financial penalties associated with non-compliance.

Enforcement Actions Highlight Compliance Urgency

To protect investors and ensure market integrity, both the SEC and FINRA have created rules and regulations. SEC Rule 17a-4 and FINRA Rules 4511 and 2210 mandate preserving electronic records in a non-rewriteable and non-erasable format. They also outline standards for communications with the public, ensuring records are readily accessible for examination. FINRA Rule 3110 further underscores the need for supervisory systems to monitor associates' activities to ensure compliance.

In recent years, the SEC and FINRA have significantly increased their enforcement actions for communications compliance infractions. In 2023, the SEC imposed $289 million in fines on 11 Wall Street firms for not properly maintaining electronic communications. Another set of penalties totaling $79 million was levied against ten firms for similar violations​​​​. The first half of 2024 already has 16 firms facing over $81 million in fines for recordkeeping failures​​. It’s easy to see that these actions highlight the need for stringent recordkeeping and the importance of firms adopting effective compliance solutions.

Digital Message Surveillance

SS&C is excited to introduce Digital Message Surveillance (DMS), an innovative solution that addresses the complexities and nuances of communications compliance in the wealth management industry. This new module is explicitly designed for advisory firms by offering a holistic approach to communications archival and evidence of supervision that goes beyond the conventional broad-brush solutions. DMS differentiates itself by integrating account-level surveillance with message surveillance within a single product, creating a seamless solution that connects the dots between communications and transactions. DMS offers robust customization to ensure firms can create unique policies around firm-specific rules and SEC & FINRA regulations, providing a well-rounded solution that safeguards firms from potential penalties.

This unique product captures data from various communication platforms, including Black Diamond Timeline, ensuring that firms can maintain compliance when communicating with their clients, whether externally via email, social media, SMS text, chat applications, or internally via collaboration tools. As a Black Diamond client, enabling DMS for Timeline allows firms to capitalize on the ability to communicate directly within the Black Diamond portal, sharing updates, reports, and other commentary with their clients.

Focusing on What Matters

With the recent spike in enforcement actions by the SEC and FINRA, coupled with the rapidly evolving methods of communication used by clients, it’s more critical now than ever to adopt a communications compliance strategy. DMS offers a significant advancement in regulatory technology, as it is the first custom-tailored solution for the wealth management space. As we look to the future, adopting advanced solutions like DMS will be instrumental in enabling firms to meet their regulatory obligations while focusing on their core mission of serving clients and growing their businesses.

To learn how the SS&C Black Diamond Wealth Platform can support your unique advisory business, request your personal demo, call 1-800-727-0605, or email