Body of Law:
FINRA notes that firms continue to encounter issues with complying with recordkeeping rules. It comes as no surprise that the primary exam findings were deficiencies stemming from relationships with external vendors. FINRA's exams found that firms often did not understand that required records, even those stored using a vendor's services, must be fully compliant with the rules. While it is understandable that firms should not be able to outsource away their obligations, this makes vendor diligence extremely important. When selecting a vendor, a firm should ensure that its vendor fully understands the regulatory obligations and is capable of meeting them. In addition, firms would be wise to regularly test their vendors' capacities to ensure that all records are being kept appropriately and are accessible as required.
