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Waiting to E-Hale: Compliance Officers Fear New SEC Ruling

The Securities and Exchange Commission is expected to issue an amendment to Sec. 204 and Rule 204-2 of the Investment Advisers Act of 1940 that is likely to affect record retention – and that worries compliance officers, Investment News reports.

The Securities and Exchange Commission is expected to issue an amendment to Sec. 204 and Rule 204-2 of the Investment Advisers Act of 1940 that is likely to affect record retention – and that worries compliance officers, Investment News reports. One cause for their attention to e-mail retention, among other things, may be a $2.5 million fine Morgan Stanley recently paid to the SEC to settle charges for failing to produce – or produce in a timely fashion – e-mails the agency had asked for.

The SEC has the right to examine all records, including those not covered by Rule 204, but that creates storage problems for companies. J. Christopher Jackson of Hansberger Global Investors told a chief compliance officer training seminar that one way to cut down on the number of files to be retained is, for example, to ban the use of instant messaging for company business, as his firm has. Another suggestion, according to attorney Kathleen Long at the law firm of Morgan Lewis & Bockius, is to tell employees they are being monitored, which she told the seminar would act as a deterrent.

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