What Does SEC Rule 17-4 Mean for Small FINRA Firms?

Although SEC rule 17a-4 is the de facto regulation used by FINRA, it has special significance for small firms such as Broker-dealers and registered investment advisors. For example, small firms don’t have the IT budgets of large firms so they need to outsource the archiving and supervision of their electronic records to a designated third party.  Therefore, to properly achieve 17a-4, they have to take a few extras steps to make sure regulators are happy:

  1. Firm must choose a 3rd party storage provider that can remotely archive books and records, emails and other systems data for disaster recovery
  2. Firms must ensure the 3rd party provider they choose to archive their electronic records for rule 17a-4 has the tools to properly supervise archived data. Ideally they will be given a secure web interface that compliance and other key people can use to access data in the event of an audit or for regular compliance supervision
  3. Lastly, the third party storage vendor that is archiving the data for 17a-4 needs to act as the designated third party provider (D3P). Since they have the data, they need to be able to reproduce it, in its original format if requested by FINRA.
Allan Lonz
Allan Lonz
Allan Lonz, President and CEO of AdvisorVault is a veteran in the field with over 15 years experience providing data compliant solutions to the financial industry, especially for small firms. Recognizing that very few backup vendors understood the data compliance challenges of small broker-dealer firms, Allan created AdvisorVault - a remote backup company designed to provide his customers with a solution to ensure they meet all current rules from FINRA and the SEC. It includes all the hardware and software to remotely backup, archive and ensure disaster recovery of critical electronic records such as email, books and records and all other data at head office, branch offices and remote locations in accordance with rules 17a-3 and 17a-4. With Allan’s deep understanding of technology, compliance and finance he brings a unique mix of expertise that allows him to design a complete turn-key product. Priced at one small monthly fee, this "out-of-the-box " approach takes the burden off his customers shoulders and allows them to experience complete data compliance peace of mind simply and inexpensively.