Advisors: Is Your Texting Compliant?

Text messaging has become an extremely popular way to communicate. According to Pew Research, the average person receives 41.5 text messages a day compared to just 12 phone calls. Young adults are much more avid texters, sending an average of 109.5 messages per day, which suggests that this form of communication will only become more widespread.

Financial advisors can’t ignore text messaging as a critical form of communication with clients, but compliance can be a lot more challenging since texting is harder to supervise, monitor, and archive. After all, text messages can take place via traditional SMS or via phone-specific platforms like Apple’s (AAPL) iMessage and Google (GOOG) Android’s Hangouts. These messages can also be sent across different devices, such as from a laptop or desktop computer to a mobile phone.

Let’s take a look at how the law reads and check some steps that financial advisors can take in order to ensure that they’re in compliance. (For related reading, see: Top Compliance Headaches for Financial Advisors.)

Interpreting the Law
NASD Conduct Rule 3110 and Section 17(a) of the Securities Exchange Act of 1934 require brokers and financial advisors to establish and maintain a system to supervise the activities of its associates that is responsibly designed to achieve compliance with applicable securities laws.

In particular, Rule 3110 mandates the review of incoming and outgoing electronic correspondence and internal communications relating to the member’s investment banking or securities business. Section 17(a) further mandates that broker-dealers maintain records for at least three years, including original communications received and copies of all communications sent by members, brokers, or dealers relating to his or her business.

In 2014, the SEC charged several affiliated brokerage firms with failing to retain and supervise text messages sent or received by certain associated persons. The errors resulted from a faulty configuration of the BlackBerry Enterprise Server and the firm ended up paying a $275,000 fine. These problems could have been avoided by having the proper systems in place to ensure that text messages were securely archived for future reference. (For related reading, see: Compliance: The Price Companies Pay.)

Technology Solutions
The easiest way to ensure compliance with these laws is to manually archive all electronic communications by using company-approved devices. Some business smartphone makers such as BlackBerry provide enterprise software solutions to archive communications. The problem is that these solutions require that employees use a company smartphone to conduct work; many workers would rather use—and do use—their personal phone.

There are a growing number of technology solutions designed to make mobile compliance a lot easier for businesses. By archiving messages, financial advisors can ensure that they’re complying with Rule 3110 and proactively ensuring that e-discovery is easier in the event that problems occur. Many of these solutions also support bring-your-own-device (BYOD) policies and operate across multiple platforms, including Apple, Google, and Microsoft (MSFT).

MobileGuard and MobileIron are just two of many companies that offer SMS archiving, mobile voice recording, and secure messaging services delivered as a cloud-based or on-premises service. While these solutions can be somewhat expensive and time consuming to implement, they are significantly less than the fines that would be incurred for non-compliance, as well as any added costs associated with discovery during a lawsuit requiring text information.

The Bottom Line
Text messaging as a way to communicate between clients and financial professionals is growing in popularity, especially among the younger generation, which makes compliance even more important. With numerous securities regulations mandating the review and archiving of text messages, financial advisors should have the processes in place to ensure that they’re in compliance and following best practices. The good news is that there’s a lot of software out there that can help make the process easier for financial advisory firms. (For related reading, see: SEC Audits: What Financial Advisors Should Look Out For.)

This article was written by Justin Kuepper for investopedia.com

What You Don’t Know About Mobile Hacking

Whatever programmed thoughts you have about your phone being safe as long as it stays in your pocket—erase them now. The truth is: it is relatively easy to hack into a phone, even if it is smart.

Today, phones aren’t just devices we use to place calls. We use them to transfer money from one bank account to another. We store passwords and personal information on them. We video chat, instant message, play games and more. We are always more attached to our phones than we think. Ever caught that nosy guy sitting next to you on the train catching a not-so-sneaky glimpse of what you were texting, reading or playing on your phone? You were really annoyed, (weren’t you?) even though chances are he had no idea of what you were actually doing.

Because phones are evolving to smartphones and able to do incredible things they weren’t able to before, we are depending on them more than ever. Of course, hackers know this. One easy way to hack into a phone involves only the art of deceit and nothing more. “For instance, a would-be hacker might call you and pose as the phone company saying they need to update your account and need your password. Or the hacker might get enough of your information to call the phone company and pose as you,” says Robert Siciliano, a McAfee consultant and identity theft expert.

In the case that you do get this type of call, remember that your mobile carrier will never call you to ask for a password, even if they are doing an “update.” The general rule you should follow is to never give out passwords or personal information via phone, unless you have actually called first to ask for an update of some sort.

Hackers also know that many carriers still use default passwords for the phones they issue and a good number of people just don’t know to change them. This makes their job super easy—they can simply look up default passwords provided by carriers and use them to their advantage.

The best precaution you can take is to change your password occasionally.

In the widely known News Corp. scandal, “the now-closed News of the World paid bribes to police and intercepted the voice mails of celebrities, politicians and crime victims.” (Aug16th, WSJ) It is extremely likely that these phone hacks intro voicemails involved easy access to default passwords of victims who hadn’t changed them on their phones.

More technically adept hackers may “get a bit of information about your account and send a phishing email purportedly from your carrier asking you to log in. At that point they will have your password and other sensitive information.”

Because smartphones allow applications to be run on them, hackers can easily attach malicious codes to these applications that are downloaded on a daily basis. The “safe-in-my-pocket” thoughts should disappear—your phone doesn’t even need to be seen to be hacked. Be cautious of the applications you download, especially if you’re an Android user. Publishers are allowed to download their applications right into the Android market, so be careful.

The bottom line is: Be cautious about the activity you conduct on your phone. Fewer purchases via a website from your mobile device, fewer risky downloads and more password changes today may mean fewer headaches tomorrow.

 

Source: http://technewscast.com/technology/tech-buzz/mobile-hacking-how-safe-is-your-smartphone/

BROKER’S WORLD: Morgan Stanley Smith Barney Brokers Text Away

BROKER’S WORLD: Morgan Stanley Smith Barney Brokers Text Away

NEW YORK (Dow Jones)–Morgan Stanley Smith Barney to its brokers: U can text now.

The rule change, delivered in a memo in late January, allows brokers with firm-managed BlackBerries to use them for texting. It was prompted by requests from staff in the field, said a spokeswoman from Morgan Stanley Smith Barney, the brokerage joint venture of Morgan Stanley (MS). It makes the company the only big brokerage to allow the practice.

About 2,000 advisers and managers have firm-managed BlackBerries and are affected by the policy. Morgan Stanley Smith Barney will keep a record of the texts, to comply with industry regulations that it retain all electronic messages for three years. The company also says it will use the same process it has in place to review its staff’s emails.

A Morgan Stanley Smith Barney broker based in the Midwest said he doesn’t expect to start texting with his clients, but since he only carries one phone, he’s happy to have an easier way to communicate with his wife.

“For me, it’s more about how can I be the most productive, and that helps a little bit,” said the broker, who requested that his name not be used.

Spokeswomen for Bank of America Corp.’s (BAC) Merrill Lynch, and UBS AG’s (UBS) UBS Wealth Management America said their companies don’t allow brokers to use company-issued mobile devices to text. A spokesman for Wells Fargo & Co.’s (WFC) Wells Fargo Advisors said the company doesn’t issue mobile devices to its financial advisers, and those who use their own aren’t allowed to text clients.

As forms of electronic communication multiply and become more popular, financial services companies are struggling to keep pace in terms of policies and regulatory compliance issues. With the growing influence of smart phones, as well as social networking sites like Facebook and Twitter, the industry has been debating how to help brokers expand the ways they can reach out to clients.

“I think there is a very keen interest in the industry right now on how firms can utilize different technology to engage in business communications,” said Joseph Price, senior vice president of the advertising-regulation division of the Financial Industry Regulatory Authority, Wall Street’s self-policing organization.

Morgan Stanley Smith Barney’s new policy could put it a step ahead of the curve. Dan Nemo, chief operating officer of TextGuard, a company that helps firms monitor and archive communications sent through mobile devices, said he has spoken to brokers who have been frustrated when they have received texts from clients, but couldn’t reply.

“The broker wants to communicate with the customer and client the way the customer and client wants to communicate with them,” Nemo said.

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The Need for Mobile Compliance

According to the CTIA–The Wireless Association, by December 2009 Americans sent 1.5 trillion texts on annualized rate.[i] According to the industry, as more smartphones become prevalent in business applications the use of text messages in commerce will only increase.  In addition, more companies are utilizing text messages as a way to keep in touch with their clients.  This increase has not only been in the financial services industry where the speed of information delivery can affect the profitability of a transactions but text messaging has found its way in to other industries such as pharmaceuticals.  In September 2010, Rite Aid decided to allow customers to subscribe to mobile alerts with regard to prescriptions.  More companies will follow this trend; failure to do so might result in a loss of competitive advantage.  As a result, CIO’s must ensure that their companies are compliant with the applicable rules and regulations.  If executives fail to take the risk seriously they may find themselves in the middle of a lawsuit.

The use of text messages has become so prevalent in today’s society that it has started to displace normal forms of communication, i.e. phone calls and physical interaction.  The human resource departments must be aware of this shift and address this in context with their sexual harassment policies.  “Sexting,” an individual could be construed as sexual harassment.  In Calmut County, Wisconsin the District Attorney has resigned over a “sexting” sexual harassment claim.  In 2009, the DA sent sexually explicit to a domestic violence victim in which he was prosecuting the boyfriend, which further victimized the woman.[ii] This type of sexual harassment case will only increase in volume as more people begin to use texting.

So what is a CIO or senior executive to do with regard to corporate policies and procedures?  The first thing all senior executives must do is evaluate their procedures with regard to the use of electronic communication devices.  The next would be to determine what type of electronic infrastructure they currently have and where the potential exposure is.  There are two different routes executives can take: write a set of procedures that forbid the use of such technology in the workplace, which is not practical; or obtain an electronic communications software application and that filters these phones or an application that completely censors this type of text.  One of the leading manufacturers of smartphones, Apple, Inc., has had a patent recently approved which will allow all “sexting” messages to be blocked.[iii]

These filters are only as good as the person that designs them and fail to do the most important thing; they only filter and block, they are not proactive in identifying potential risks and they do not capture pertinent data.  However, compliance solutions such as TextGuard’s SMS mobile compliance software allows for the collection and filtering of messages in a compliant manner.  This enables senior executives to evaluate current trends and gives greater legal protection to the corporation since this type of compliance monitoring indicates that the company reviews such messages for inappropriate behavior, illegal behavior, and unethical behavior.

[i] CTIA–The Wireless Association® Announces Semi-Annual Wireless Industry Survey Results, March 2010, http://www.ctia.org/media/press/body.cfm/prid/1936

[ii] Gannett Wisconsin Media, Jim Collar, October 5, 2010

[iii] Tech Week, Critics Welcome Apple’s Anti-Sexting Technology

The Mobile Communications Industry Demonstrates Momentum

The GSMA today reported that more than 49,000* visitors from 200 countries attended the 2010 GSMA Mobile World Congress, the premier event for the mobile communications industry. The four-day conference and exhibition attracted executives from the world’s largest and most influential mobile operators, software companies, equipment providers, Internet companies and media and entertainment organisations, as well as government delegations. 54 per cent of Mobile World Congress attendees hold C-level positions, including more than 2,800 CEOs.

“It’s a hugely exciting time to be in the mobile communications industry and the extremely strong attendance at the 2010 Mobile World Congress underscores that,” said John Hoffman, CEO, GSMA Limited.  “The innovation that is the hallmark of our industry was on display front and centre this week, from the insightful presentations in our conference programme to the demonstrations of new devices, technologies and services in the exhibition halls.  Once again, Mobile World Congress stands out as the must-attend event for the global communications industry.”

During the event, leaders from companies including Alcatel-Lucent, BBC, Bharti Airtel, China Unicom, Ericsson, Huawei, KDDI, RIM, Samsung, Spotify, Telstra and Vodafone, among others, discussed and debated the trends and issues which are shaping the mobile industry today and into the future.  In a Mobile World Congress first, Google Chairman and CEO Eric Schmidt delivered a Mobile World Live keynote to a standing-room only crowd in Barcelona; the session has also been viewed by more than 35,000 people to date via the Mobile World Live portal.  To access the replay of the Mobile World Live keynote, as well as interviews with the industry’s leading executives, please visit www.mobileworldlive.com.

More than 20,000 people visited the inaugural App Planet, a focused event designed to bring together the many critical elements of the broad mobile application ecosystem together in one location. Google, Motorola, RIM, Sony Ericsson, Vodafone and WIPJam each held application developer conferences (ADC) within App Planet.  Overall, more than 6,000 developers attended Mobile World Congress this year.

The 2010 Congress featured 1,300 exhibiting companies and occupied more than 56,000 net square metres of exhibition and business meeting space.  Nearly 2,400 international print, Web and broadcast media attended the event to analyse and report on the many significant industry announcements made at the Congress.

“The GSMA is committed to holding the Mobile World Congress in Barcelona through 2012,” continued Hoffman. “We thank the city of Barcelona, Catalonia, Fira de Barcelona and all our Barcelona partners for being such warm and efficient hosts, and we look forward to being back here next year.”

Sponsors for the 2010 Mobile World Congress included LG Electronics as Platinum Sponsor and Generalitat de Catalunya as Mobile Innovations Platinum Sponsor.  For more information on the 2010 Mobile World Congress, please visit www.mobileworldcongress.com.

Note to editors

*This figure includes all attendees for the event, including delegates, exhibitors, contractors and media

About the GSMA

The GSMA represents the interests of the worldwide mobile communications industry. Spanning 219 countries, the GSMA unites nearly 800 of the world’s mobile operators, as well as more than 200 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers, Internet companies, and media and entertainment organisations. The GSMA is focused on innovating, incubating and creating new opportunities for its membership, all with the end goal of driving the growth of the mobile communications industry.

For more information, please visit Mobile World Live, the new online portal for the mobile communications industry, at www.mobileworldlive.com or the GSMA corporate website at www.gsmworld.com.

Consumer loyalty patterns reflecting intense competition in mobile

New research suggests that mobile consumers in Western Europe are displaying less loyalty than those in North America by spreading their mobile connections across multiple operators. The new study, commissioned by Wireless Intelligence, aims to identify the impact that multiple mobile connections per user is having on customer loyalty patterns (a mobile connection is defined as either a SIM card or a unique mobile phone number in markets where SIM cards are not used).

More than two thirds of users with multiple mobile connections in the US and Canada remained loyal to a single mobile operator, while less than 40 percent of consumers in the ‘big five’ European markets (UK, France, Germany, Italy and Spain) were likely to keep all their mobile connections with one operator. The least ‘loyal’ market in the study was Italy – a market where the vast majority of consumers maintain more than one mobile connection (around 1.77 SIM cards per user). According to the study, 81 percent of Italians spread their mobile connections across different network providers with only 19 percent remaining loyal. This trend is magnified by the absence of handset subsidies and the large prepaid connections base (prepaid accounted for 84 percent of Italian mobile connections in 2Q09). This has led to a price war in the prepaid segment, which is driving down effective price per minute and voice revenues. In order to differentiate and generate additional profits, Italian operators are now focusing on value-added services and innovative propositions to push their brands forward. In this context, our research also found that Italy has is approaching saturation with ‘real’ penetration currently at 85 percent – compared to reported per-connections penetration at 151 percent. The study found that Italian women were less loyal than men (83 percent compared to 78 percent), and that users in the 20 to 30 year age range were least likely to stay loyal to a single operator.

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