October 15, 2025

The Hon. Paul Atkins
Chairman
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090

Re: Modernizing Communications and Record Retention Rules for Broker-Dealers, Investment Advisers, and Security-Based Swap Dealers

Dear Chairman Atkins,

The Securities Industry and Financial Markets Association and its Asset Management Group (collectively, “SIFMA”)¹ are requesting that the Securities and Exchange Commission (“SEC” or “Commission”) take necessary steps to modernize the communications and records retention rules applicable to broker-dealers, investment advisers, and security-based swap dealers, including Rules 17a-4 and 18a-6 under the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 204-2(a)(7) under the Investment Advisers Act of 1940 (“Advisers Act”) (together, “Communications Rules”).

SIFMA urges the Commission to amend the Communications Rules to clarify the types and scope of communications that must be retained under the federal securities laws and to provide safe harbors for compliance with each of the Communications Rules. We are also proposing to eliminate the requirement that a third party, such as a cloud service provider, must file a third-party undertaking with the Commission that the third party agrees to provide access to the broker-dealer’s documents to the Commission under Exchange Act Rule 17a-4(i).

The settlements in the SEC’s off-channel communications cases starkly exposed the challenges of complying with the existing communications retention requirements under federal securities laws. The SEC brought over 90 cases, imposing penalties of over $2.2 billion and burdensome undertakings on settling firms. Notably, Commissioners Peirce and Uyeda publicly recognized the issues with the Commission’s prior settlements, chiefly that the enforcement actions brought by the Commission did not reveal the existence of any violations other than of the communications retention rules themselves or were otherwise administrative in nature. Moreover, the Division of Enforcement applied a strict liability approach without any credit given for good-faith efforts to prevent, detect, and limit off-channel communications.²

These requests aim to modernize the Commission’s rules to reflect current and future uses of various communications tools and to ensure that broker-dealers, investment advisers, securities-based swap dealers, and transfer agents remain competitive in the financial markets. To do that, our members must meet customers’ needs and therefore must communicate on the channels most used by their customers and clients. The existing Communications Rules have created burdensome, costly, and unnecessary roadblocks for firms in effectively managing their relationships with clients through seamless and modern communication. As a result, firms may
be competitively disadvantaged against other types of financial institutions that do not have restrictive communications retention requirements.

1. Executive Summary

The Communications Rules impose outdated, overly broad, and strict liability standards that hinder firms’ ability to communicate effectively with clients, using modern technologies, and remain competitive in global markets. Overall, SIFMA is proposing that the communications retentions rules be reformulated to apply in a consistent and easily understandable way to a discrete, defined universe of communications. In that regard, SIFMA is proposing that the Commission:

• Narrow the retention obligation to client-facing business communications substantively related to investment or securities advice or transactions, consistent with the original intent of the rules. The expansion of “communications” to include virtually all forms of electronic messaging has created unmanageable compliance burdens and costs without corresponding investor protection benefits.
• Remove the “business as such” requirement and, therefore, reduce uncertainty about the types of communications firms are required to retain.
• Exclude categories of communications that provide no investor protection benefit, such as emojis, unsolicited inbound messages, or ministerial messages such as “I am running late” and also, for the avoidance of doubt, exclude categories of materials that are not communications at all, such as AI-generated meeting transcripts and collaborative platform inputs.
• Provide a safe harbor for firms that implement and maintain reasonable policies and procedures. This would eliminate what might be deemed a strict liability standard in the existing Communications Rules.
• Maintain supervisory responsibility for communications. SIFMA is not proposing to change firms’ supervisory obligations. As a result, firms may choose to retain communications for a period beyond what is required by the amended rules.
• Harmonize retention periods for communications across all registrants at three years. Retention requirements differ across rules (three years for broker-dealers, five years for advisers), creating complexity for dual registrants. SIFMA proposes harmonization to a uniform three-year standard.
• Remove third-party undertakings for record storage providers. The mandate that cloud service providers file undertakings under Rule 17a-4(i) deters adoption of secure modern technologies. Further, some cloud service providers refuse to provide them.

These amendments would modernize the Communications Rules to more accurately reflect how communication occurs today, reduce unnecessary costs, preserve firms’ supervisory responsibilities, and maintain strong investor protections.

2. The SEC’s Communications Rules Must Be Substantially Amended to Narrow the Scope of Electronic Communications That Must Be Retained.

The broker-dealer and investment adviser rules were originally drafted to encompass only formal written communications and intentionally excluded oral communications of any type, underscoring that retention obligations were not intended to apply to informal communications. Since then, communication has substantially moved away from paper communications towards e-mail, text messaging, message boards, social media, and other electronic messaging platforms. Many of these types of communications mirror what might have been communicated previously via a brief phone call, yet the SEC has continued to broaden the scope of its interpretation of the Communications Rules and failed to provide guidance on how firms should interpret these rules as technology continues to evolve. As a result, the scope of communications retained has expanded enormously.

It is time for the Commission to revise the Communications Rules, so they reflect current practices and technology, while ensuring that future advances in communications are not unnecessarily swept into their scope. SIFMA accordingly is proposing language for the Communications Rules that will achieve these goals through sensible reform that brings the rules back to their original intent and purpose and provides clear parameters to firms to allow for consistent practices.

Attachments A, B, C, and D include proposed amendment language for the Communications Rules. The proposed Rule 17a-4 amendments are intended to limit the scope of communications firms would be required to retain to those sent to customers or prospective customers and specifically related to the business of the broker-dealer as defined in the FINRA bylaws.³ For investment advisers, the proposed amendments are intended to limit the retention requirement to written communications between an investment adviser and external parties (e.g., a client or investor) that are substantively related to recommendations and advice regarding investments or securities. The proposed rules for security-based swap dealers are intended to align with the broker-dealer and investment adviser standards. This construct aims to limit the communications required to be retained to those that are fundamental to the business and help to achieve investor protection. As is the case currently, firms would continue to have the option to retain whatever communications and records they need to meet their other legal, compliance, or supervisory purposes.

Further, we propose that the following categories are not communications for the purposes of the Communications Rules and therefore, the retention requirement should specifically exclude:

a. Artificial intelligence-generated summaries, transcripts, or recordings created on online meeting platforms like Zoom AI Companion and Microsoft Teams;

b. Any inputs into and outputs from any artificial intelligence platforms or tools;⁴

c. Any system-generated or system-disclosed text derived from oral communications (e.g., closed captioning);

d. Text entered or uploaded into collaborative tools or platforms (e.g., Google docs); and

e. Text viewable in or downloadable from data rooms (whether operated by a broker-dealer, investment adviser, or third party).

1. SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets, and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (“GFMA”).

   SIFMA’s Asset Management Group (SIFMA AMG) brings the asset management community together to provide views on U.S. and global policy and to create industry best practices. SIFMA AMG’s members represent U.S. and global asset management firms that manage more than 50% of global AUM. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds. For more information, visit http://www.sifma.org/amg. [↩]

2. SEC Commissioners Hester M. Peirce and Mark T. Uyeda, A Catalyst: Statement on Qatalyst Partners LP (Sept. 24, 2024), https://www.sec.gov/newsroom/speeches-statements/statement-peirce-uyeda-qatalyst-09242024. [↩]
3. See FINRA By-Laws, Article I(u). [↩]
4. Such content would be excluded under the proposed amendments to the Communications Rules because such inputs and outputs do not qualify as communications between natural persons, nor do they qualify as communications received from or sent to natural person customers, prospective customers, investors, third-party representatives, or other broker-dealers or investment advisers. [↩]