Redwing Capital, LLC Chooses AdvisorVault as Their FINRA Designated Third Party Storage Provider (D3P)
When Redwing decided to use a cloud based service for collaboration and file sharing, FINRA did not find this compliant. Mainly because data is not stored in a non-rewriteable format so users can easily remove electronic records; furthermore data is not archived for the required amount of time. Thus making cloud storage a non-compliant solution, so an additional step was required to ensure any records stored in the cloud were compliant.
The D3P regulation has serious consequences for FINRA firms and should form the basis of their data compliance strategy because the D3P should also act as the remote backup provider to archive electronic records in accordance with FINRA rules 17a-3 and 17a-4. This way several key rules are simultaneously met.
However, for small firms such as broker-dealers, finding this kind of provider can difficult because data is often dispersed throughout the whole organization on servers, desktop computers, laptops at branch locations or in the cloud. In addition, this data is stored in various formats such as emails, social media posts, office documents or scanned electronic records. Therefore, it is hard for small firms with limited budgets to find the ideal solution to effectively store this diverse information and at the same time satisfy the important D3P obligation.
Nonetheless, with this in mind, a small firm should look for three important features in a D3P:
1. Remote Data Archiving: The best way for small firms to achieve the D3P requirement is to choose a provider that offers remote data archiving. This means the provider uses an automated method to remotely transfer the required data from critical systems each night. It will then keep this data archived in a secondary location for the required amount of time.
2. At Flight and At Rest Data Encryption: Because financial firm’s electronic records are so sensitive, auditors will want firms to choose a D3P that offers at Flight and At Rest Data Encryption.
3. “Pay-As-You-Grow” Pricing Model: Small FINRA firms such as broker-dealers will want a provider that offers a Pay-As-You-Grow pricing model. By doing this, they are able to control the cost of data compliance because in the beginning they are only paying for data that needs archiving.
Because Red Wing Capital wanted to use cloud technology to store data for collaboration over the internet, they need to take an extra step to ensure this data is compliant for auditors. They chose AdvisorVault because it was a secure, automated method to compliantly protect data stored in the cloud to help them assure to pass audit and the long-term archiving rules in FINRA rule 17a-4.
AdvisorVault, http://www.advisorvault.org offers the only designated third party service designed for small FINRA firms such as broker-dealers, independent investment advisors and wealth management firms. Our solution is suited specifically to help them achieve today’s stringent data archiving rules for firms storing electronic records in the cloud while helping them keep the overall cost of data compliance under control. With our turnkey D3P service, firms are assured to achieve the demands defined in the 17a-3 & 17a-4 electronic records archiving rules.
About Red Wing Capital
Red Wing Capital is an independent Indianapolis-based broker-dealer. The firm’s primary charge is to provide investment banking services and advice to small and mid-sized firms, we help companies with the task of raising capital for purposes such as acquisition, expansion or increased working capital needs. In addition, Red Wing Capital can advise companies on improving financial performance for the purpose of sale or refinance. Red Wing Capital has relationships with commercial banks, mezzanine funds and private equity firms.
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