SEC Staff Favor New Guidelines on E-mail Monitoring
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Wednesday, March 01, 2006

SEC Staff Favor New Guidelines on E-mail Monitoring

Securities and Exchange Commission staff are eager to codify changes to e-mail monitoring requirements, according to Doug Scheidt, associate director in the SEC's office of investment management.

In an interview Tuesday with Dow Jones Newswires, Scheidt said it is likely that staff will ask the commission to propose adjustments to current rules, which compel fund managers and investment advisors to retain emails for review by SEC examiners.

SEC spokesperson John Heine confirmed to InvestmentWires that staff are working on recommendations for changes to Books and Records Rules, and the proposal should be ready by year's end. "Some people think we're too strict, some people think we're not strict enough," he said. "I don't think there's any information available on which way [the proposal]'s going to go."

Since mutual fund disclosure scandals began breaking in 2003, the SEC has ramped up its surveillance of e-mails sent and received by mutual fund companies. The more stringent procedures, say some critics, incur excessive costs and place too great a burden on the shoulders of SEC offices. Requests for e-mails have also drawn complaints from investment professionals, who worry that reviews of internal emails represent a violation of privacy.

Also on Tuesday, Paul Atkins, one of the SEC's five commissioners, remarked in a speech that the issue of email regulation "has not yet been resolved ... We commissioners must ensure that it will be resolved in the near future."

Atkins added that any regulations should allow finance advisors as much flexibility as possible, and should not "unduly" impede their ability to work with clients and utilize the latest technology.

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