[May 28, 2015]

Smarsh Survey Reveals Message Supervision Plays a Growing Role in Risk Prevention

Smarsh®, the leading provider of hosted archiving solutions for compliance and e-discovery, today released its fifth annual Electronic Communications Compliance Survey Report at the 2015 FINRA Annual Conference. This year's results highlight gaps in financial services firms' electronic message compliance programs and illustrate the growing role of electronic message oversight in identifying corporate risk.

The results also show compliance officers feel more confident about their firms' use of new communications channels for business, including social media. However, there is concern around the retention and production of text messages-most firms that allow texting have minimal or no confidence in their ability to produce messages if requested.

"The oversight of electronic communications has evolved to become far more than the cursory, check-the-box review of email that existed years ago," said Stephen Marsh, CEO and founder of Smarsh. "Today, with more data points and better technology at their disposal, compliance teams are more empowered to identify risky communications and then mitigate potentially damaging issues before they become serious. Also, as the compliance role is elevated in importance within an organization, convergence with IT and marketing initiatives is increasing. As a result, compliance is becoming an enabler of social media usage, and a key part of cybersecurity strategy."

The survey found nearly three-quarters (72 percent) of respondents believe message supervision is critical to identify real risk in their organization, up 13 percent from last year. Eighty-one percent believe message supervision delivers actionable insight for the business. Sixty-four percent of respondents indicate responsibility for all non-compliance-related data production requests related to litigation, e-discovery and HR investigations.

The report addresses several additional aspects of electronic communications compliance. Key findings include:

Greater Social and Mobile Engagement

• This year all of the "big three" social media channels (Facebook, Twitter and LinkedIn (News - Alert)) were permitted for business communications at higher rates compared to last year.
• For the first time in five years, new and emerging communications channels were cited as a concern for fewer than half of the respondents.
• Firms are not only permitting employees to communicate on busness social media accounts (for instance corporate 'company pages')-they're allowing advisors to conduct business through personal social media accounts. Eighty percent of firms that allow social channels allow employees to use personal LinkedIn accounts and 63.5 percent allow personal Twitter (News - Alert) accounts.
• While the growth in policy and enforcement technology trends in the right direction, a compliance gap still remains. Thirty-nine percent of respondents that allow social channels do not have a solution in place to retain and supervise social media.

• Allowance of personal devices for business communications is up 17 percent from last year, and 73 percent of respondents have a Bring Your Own Device (BYOD) policy, compared to 58 percent last year.
• The rates of text message allowance for business communications and archiving continue to rise. However, compliance officers have significantly lower confidence in their ability to produce text messages upon request compared to other types of electronic messaging.

Exam Preparation

• Email remained the message type that was most requested during a regulatory exam at 77 percent, up 13 percent from 2014. Website pages, instant messages, Bloomberg or Reuters (News - Alert) messages, social media and text messages round out the top six most requested message types.
• Supervision activity reports (proof of supervision), disaster recovery or business continuity plan (DR/BCP) and written supervisory procedures (WSP) remained the top three requested forms of related documentations. Requests for these materials are on the rise this year as well.

Data Production Challenges

• The issue of data production is under FINRA's microscope this year, as the self-regulatory organization explicitly called out the inability to provide data in the requested time as "unacceptable" in its 2015 Exams Priorities Letter¹.
• The No. 1 challenge compliance officers face in producing data is managing the number of platforms used to retain and supervise this data.
• A single platform to manage and supervise messages from various communications channels was reported by 83.2 percent as 'important to critically important' when developing a comprehensive electronic messaging compliance program.

About the survey

In February and March 2015, 274 individuals in financial services with direct compliance supervision responsibilities participated in a 31-question survey designed to identify current trends and share insight on policies and practices about the retention, supervision and protection of electronic communications. View the full survey report at: www.smarsh.com/2015compliancesurvey.

About Smarsh

Smarsh® delivers cloud-based archiving solutions for the information-driven enterprise. Its centralized platform provides a unified compliance and e-discovery workflow across the entire range of digital communications, including email, public and enterprise social media, websites, instant messaging and mobile messaging. Founded in 2001, Smarsh helps more than 20,000 organizations meet regulatory compliance, e-discovery and record retention requirements. The company is headquartered in Portland, Oregon, with offices in New York City, Atlanta, Boston, Los Angeles and London.

¹FINRA (01/06/15) "Exam Priorities Letter." Retrieved from http://www.finra.org/sites/default/files/p602239.pdf

View source version on businesswire.com: http://www.businesswire.com/news/home/20150528005706/en/

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