SEC Regulations and Communication Compliance: What You Need To Know

Do the Security Exchange Commission regulations affect your business? If yes, these guidelines can impact how you communicate with your customers and whether you store these conversations. Are you compliant? This blog post explains what the regulations are, how they affect your business, and how to ensure you meet these requirements.

A Brief History of the Security Exchange Commission

The SEC is a government organization created in 1934 to regulate the securities industry. This was an immediate reaction to the stock market crash that occurred in 1929. After the crash, the government determined that proper regulations could discourage fraud and reduce the likelihood of another crash.

The SEC enforces laws and regulations related to securities trading, investing, and public offerings. It can also act against entities it believes failed to follow its SEC guidelines. This has created a safer securities exchange market for investors, but it has also resulted in multi-million-dollar fines for several companies.

The SEC regulates any business that offers securities, defined as investment contracts. Securities include stocks, bonds, and other investment products. If you offer securities to the public, you must register with the SEC. You will also need to file periodic reports detailing your financial status and any material changes to your business.

What SEC Regulations on Communication Mean for Your Business

The SEC regulates various securities-related activities, including public offerings, trading, investing, and communication. If your business is involved in any of these activities, you must be aware of the SEC regulations.

One of the most important SEC rules and regulations is Rule 17a-4. This rule requires businesses to keep records of all customer communications. Covered communications include emails, text messages, phone calls, and social media posts. Affected organizations must store these records in a way that allows them to be easily accessed and retrieved.

The SEC also issued guidance on how businesses should communicate with their customers. This guidance includes rules on the following: 

• Disclosing material information
• Sending marketing materials
• Making investment recommendations

The Potential for an SEC Crackdown

Some experts posit that the crackdown has already begun. The pandemic forced companies to pivot and adopt either hybrid or fully remote work. This compelled workers to use unconventional means of communication. Now, the SEC has begun its checks to ensure financial entities are ensuring these communications are still compliant.

As a result, the SEC has brought enforcement actions against several companies for violating communication rules. These companies have been fined millions of dollars. Some people have speculated that the apps of choice are at fault, such as WhatsApp. However, a deeper look shows otherwise. The actual discrepancies came back to failures to keep proper records and a suspicion that the evasion was deliberate.

The SEC is definitely taking a closer look at business communications. So, if you’re not compliant, you could be next. Take the proactive step of auditing your communication channels and making adjustments wherever necessary. You might need to change communication protocols and invest in archiving solutions.

How To Ensure Communications and Records Compliance

Professional archiving provides a simple solution for your communications compliance needs. The right platform can automatically capture and archive all your employee communications, regardless of the channel.

When choosing an archiving solution, look for a secure, searchable repository for all your records. The last thing you want is for nefarious characters online to have easy access to your communications records. However, you need to be able to find what you need quickly.

Employee training also plays a crucial role in ensuring compliance. When employees know what to store, they can apply this knowledge across platforms that are new to your business or that they do not usually use for work before the SEC tells them to do so.

How LeapXpert Can Help You Meet SEC Regulations

If you’re looking for a solution to meet the SEC guidelines, look no further than LeapXpert. Our platform can help you capture and archive your customer communications, regardless of the channel. Proper archiving ensures you meet the record-keeping requirements of the SEC and can help you avoid lengthy investigations, expensive fines, and bad publicity.

Communicate with confidence. Contact us today to learn more about how we help companies like yours remain compliant with the Security Exchange Commission rules.