The securities industry has recently seen some SEC enforcement cases which involved multi-million-dollar fines related to the failure of certain firms to capture all electronic communications. Firms’ processes and representatives’ compliance in this area are sure to receive continued scrutiny from regulators. To ensure that ESI’s representatives are compliant and still able to market non-securities related services under an approved DBA, this notice reiterates the process for all outside business-related email accounts, as well as non-standard NLG email formats. All ESI Registered Representatives (“RRs”), Investment Adviser Representatives (“IARs”), employees, and associated persons (including non-registered fingerprinted administrative staff) are required to use an NLGroup email or a firm-approved non-standard (a.k.a. “vanity”) email address for all business-related communications. Using an unapproved outside email address could cause violations of securities laws and could result in disciplinary action to the representative.
What is a Business-Related Communication?
Definition: Business-related communications include anything relating to:
- Securities
- Investment advisory services
- Insurance (i.e. life, annuities, disability, property/casualty, health, group, etc.)
- Commodities
- Real Estate
- All investment-related activities as defined by FINRA
Business-related communications to clients, potential clients, vendors, home office employees, admin staff, or other RRs may not be sent using an unapproved outside email address.
Examples of business-related communications include, but are not limited to:
- Communicating to/from or about clients,
- Discussing appointments with a client or RR (even to say you are running late),
- Sending a form (even to print it),
- Submitting a blotter to your Field OSJ,
- Asking/answering questions to your office staff,
- Discussing anything about the Firm or the Firm’s business, or
- Communicating with vendors (i.e. wholesalers and marketing organizations).
Scanners
If you scan documents that are linked to an email, ensure the email address is your NLG email. Scanners must be linked to an NLG email address for the security of the information being scanned. Additionally, if you utilize your phone to take a photo for business purposes (e.g. photograph a driver’s license or paperwork), ensure that you upload them only to an approved email account and not your personal email. Keep in mind that these documents may have confidential, personally identifiable information and should not be stored on your phone or in the cloud. So, you will want to ensure such items are properly deleted from the device immediately.
CPA, Enrolled Agent, or Attorney Emails
RRs who are also CPAs, Enrolled Agents (“EAs”), or attorneys must use their NLGroup email for all financial services business-related communications. However, ESI recognizes that CPAs, EAs and attorneys have privacy concerns specific to these outside activities. Accordingly, those RRs who are practicing CPAs, EAs, or attorneys (or NY-only tax preparers) may use an outside email address for their accounting/tax or legal activities. To do so, RRs must maintain clear separation between their financial services and accounting/tax or legal activities, and submit a completed Email Address Certification to their supervisor and ESI Compliance.
RRs must allow inspection of the outside email if requested and agree to all other terms specified in the Certification, which include minimum retention requirements.
Vanity or Non-Standard Email
RRs and associated persons may be permitted to use a personalized or vanity email address (e.g. jsmith@abcfinancial.com) or a non-standard National Life format (i.e. something other than the standard LastName_FirstName@nlgroupmail.com configuration) for business-related emails, provided that prior approval is obtained from ESI, and that such email addresses are properly configured to flow through the National Life servers.
It is important to note that the use of web-based email such as “Yahoo”, “AOL”, “Gmail”, or like services will not be approved, and are not permitted for financial services business-related communications under any circumstances, because they do not meet the regulatory requirements for monitoring and retention.
For more information on vanity or non-standard email addresses, please review Field Notice 2022-23 Vanity and Non-Standard Email.
Questions?
If you have any questions, please feel free to contact ESI Compliance at 800-344-7437 or ESIElectroniccommunications@nationallife.com.
TC129027(1022)1