SEC modernizes recordkeeping rules

The SEC adopted amendments Wednesday that modernize how broker-dealers and other entities are allowed to preserve the electronic records they share with the commission.

The amendments update rules adopted in 1997 that required the records in question be saved in a write-once/read-many format, not so affectionately known as WORM.

“Since the 1930s, recordkeeping obligations have been vital to maintain market integrity and the SEC’s work as the cop on the beat. Today’s rule amendments will facilitate the SEC’s ability to examine and inspect records consistent with modern technology,” SEC chair Gary Gensler said in a news release.

The amendments offer more flexibility for broker-dealers and for nonbank security-based swap dealers and major security-based swap participants.

The final amendments, which will be effective 60 days after publication in the Federal Register, impact Rules 17a-4(f) and (j) and 18a-6(e) and (g) of the Securities Exchange Act of 1934. The amendments allow for an “audit-trail alternative” to WORM, as long as the recordkeeping system preserves records in a manner that permits the re-creation of an original record if it is altered, overwritten, or erased.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.