Electronic Communications: Using Third Parties for Compliance, Mitigating Social Media Risks and Fulfilling Document Requests (Part Three of Three)

As with most compliance practices at private funds, a firm’s responsibilities to monitor, preserve and produce the electronic communications of its employees have far exceeded most firms’ in-house capacities. That is exacerbated by the pervasiveness of social media and other forms of electronic messaging that blur the line between personal and business messages. As a result, fund managers are forced to develop hybrid monitoring models that rely on service providers; to remain vigilant and nimble when overseeing the social media efforts of their employees; and to explore new techniques for capturing and archiving those communications in case the SEC or another regulator requests them in an examination. This final article in a three-part series explains ways that fund managers can work with service providers to capture, archive and surveil their employees’ electronic communications and social media practices. The first article supplied an overview of recent regulatory measures – ranging from guidance to enforcement actions – related to electronic communications, as well as certain trends that are exacerbating the topic’s significance for fund managers. The second article suggested several types of considerations that fund managers should weigh when preparing employee training regimens, as well as policies and procedures, directed at rooting out improper electronic communication practices. See “Business Emails Must Be Secure to Avoid SEC Enforcement Action” (May 12, 2016); and “Survey Highlights Compliance Professionals’ Attitudes and Practices Concerning Electronic Communications Compliance” (Feb. 9, 2012).

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