Overview
The Securities and Exchange Commission ("SEC") has issued an interpretive release (the "Release") regarding electronic record storage pursuant to Rule 17a-4 of the Securities Exchange Act of 1934.1 The Release clarifies that the SEC will permit broker/dealers to use an electronic storage system that prevents alteration or erasure of records during their required retention period even though the hardware storage medium used by the system is otherwise rewriteable. This interpretation will allow the use of storage technologies providing for the erasure of electronically stored documents after their retention period expires, so long as specified conditions are met.
Discussion
When the provisions of Rule 17a-4 were adopted that permitted broker/dealers to preserve records using "electronic storage media,"2 one requirement was that the media preserve the records "exclusively in a non-rewriteable and non-erasable format."3 According to the Release, the SEC has received numerous
