To Maintain Regulatory Compliance, You Need to Capture Context



Context is essential to understand any piece of data or information. “Those are some gorgeous melons!” could be someone's positive feedback about produce at a farmer's market, or sexual harassment directed toward a farmer. 

The news proves every day that out-of-context remarks can be tremendously dangerous, especially in our online environment today, where any piece of content can be captured, edited, and shared on social media to millions of people with ease. Statements taken out of context can bring the most innocuous celebrities to their knees, wreck politicians, and create PR nightmares for brands. The question always remains: were people’s remarks actually taken out of context, or did they mean exactly what it sounded like they meant? Those lingering doubts can make it hard to overcome context errors in day-to-day life.

Context matters in litigation too. Take, for instance, a defamation case, in which ABC’s 20/20 featured allegations that a pastor had misused church donations. The pastor could be seen clearly stating, on video, “I live in a 25-room mansion. I have my own $6 million yacht. I have my own private jet, and I have my own helicopter and I have seven luxury automobiles.” Sounds awful if you’re a dedicated church donor, right?

But as his lawyer said, “If you take something out of context, you can defame some[one] just as easily as if you make up the words yourself.” The catch was in the context: the full video evidently showed that the pastor was speaking not about himself, but from the hypothetical perspective of a financially well-off, yet spiritually bankrupt, person. Those same context errors can be fatal in regulatory compliance.

Unfortunately, common web-archival methods that rely on static media like PDF files don’t fully capture the dynamic context of live internet or social media communications.

Context Counts in Compliance

Regulatory compliance demands a clear view of customer communications, including their context. Whether it’s in an internal corporate investigation into alleged misconduct or a full-blown regulatory action involving customer communications, it can be hard to know what someone said or meant without seeing the environment where the statement unfolded. It may be that a personnel action is warranted, or it may be that innocent actions have been misconstrued.

Proving what happened—as with the pastor in the video—can be challenging if you don’t have a fully navigable record of online conversations.

For example, under FINRA 10-06, the determination of whether a particular communication is actually a “recommendation” for purposes of Rule 2310 depends on the facts and circumstances—the context—of that communication. More broadly, FINRA Regulatory Notice 17-18, Social Media and Digital Communications, clarifies that customer communications occurring online or over social media are subject to the same requirements of fairness, completeness, and truthfulness as other communications. Firms must retain full archives of their communications about anything that qualifies as “business as such,” regardless of the medium by which those communications occur. Regulatory Notice 17-18 also states that a firm can adopt content, and therefore make itself responsible for ensuring that the content complies with regulatory demands, merely “by sharing or linking to [that] specific content.”

In other words, to maintain FINRA compliance—and to prove that compliance—you need navigable archives that extend beyond the target page, capturing related or linked pages as well. In a nutshell, you need context.

And don’t forget FINRA Regulatory Notice 18-15, Heightened Supervision, which requires that firms assess all of their associated persons, identify those with behavior that raises concerns, and develop heightened supervision plans where needed to protect investors. Keeping up with supervisory reviews demands the ability to review the context of statements to ensure that everyone is on the up-and-up and that those under supervision aren’t unfairly judged.

Static Archives Like PDFs Don’t Convey Context

The quick-and-dirty way to archive a website is to create a screenshot or a PDF. In, out, done—right? Not so fast.

With PDFs, you’re pretending that the internet can be reduced to paper—a static, one-dimensional representation of a media that is anything but static and one-dimensional.

See video here.

Static archives lose—or, at their very best, muddle—all of the rich context surrounding a statement. After all, you can’t click a link on a piece of paper to investigate what content a company has adopted or endorsed.

Modern websites also rely on interactive JavaScript components to engage users and answer basic questions about the company’s services. That means that, to demonstrate that those communications did not contain unfounded or unwarranted representations, you need the ability to fully play back any interactive content. You can’t do that with a PDF!

Without navigating the full dynamic website and interacting with drop-down menus, chatbots, and animations or videos, you could easily find your words skewed or misinterpreted. For instance, capturing one moment in time—without the surrounding context of disclaimers and explanations—could make it appear that an investment company made a specific promise of financial performance. Exactly what that broker—or the company’s web chat application—said to a customer could be the foundation for a costly and damaging compliance investigation. With a static archive, how can you prove that that one moment is being taken out of context?

The same goes for social media. Practically everything on Facebook, Instagram, LinkedIn, YouTube, and Twitter is interactive. Figuring out the context—who said what to whom, and who reacted to those comments—depends on having a navigable version of the full feed. Without that, you’re left flipping through still images in an attempt to reconstruct events, which is slow, clunky, and not very compelling.

There’s one more potential problem with static captures in this era of hacking, data breaches, and social manipulation: not everyone online is who they claim to be. Someone operating a fake profile using a business’s name or an employee’s name could wreak havoc by making inappropriate remarks. Without a full dynamic capture that allows the supervisor or the regulatory authority to investigate that profile and determine its authenticity, you’d have no way to prove that the comments weren’t attributable to the business.

Native-Format Archives Retain the Full Dynamic Context of Online Communications

In short, to maintain regulatory compliance with your online and social media communications, you need to capture them in context, maintain that context in your archives, and have the ability to review and supervise communications in their original dynamic format.

That’s why Hanzo recommends using native-format WARC (Web ARChive) files to generate fully navigable archives that look just like the original online content. With native-format archives, you can interact with any part of a communication, exploring the full context of all communications and proving exactly how a conversation unfolded. These types of archives also capture all dynamic content, including videos and interactive features, and links are fully clickable. That means you can investigate every interaction and every potential adoption or entanglement directly from your archive—and you can prove what did or didn’t happen.

"To Maintain Regulatory Compliance, You Need to Capture Context" is the third installment of a new series, Hanzo Knows, in which our team dives deep into essential regulatory and technology topics around web archiving, compliance, eDiscovery, and investigations. More from this series: 

Read our second installment: Web Archiving for Compliance 101: The Pros and Cons of PDF,

Read our first installment: The Complete Guide to SEC Rule 17a-4 for Compliance Professionals. 

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