Ginny/Julie:

In this case - SEC Rule 17a-4 - there are accompanying rules, SEC 17a-3
entitled, Records to Be Made by Certain Exchange Members, Brokers and
Dealers, that dictate records to be created. There is a subsection that
states in part:

"A memorandum of each brokerage order, and of any other instruction, given
or received for the purchase or sale of securities, whether executed or
unexecuted..."

So yes - if lunching with a client and the client says to sell x shares of y
security, it appears to me that such information must be recorded at some
point to memorialize the conversation/order.

Tod Chernikoff, CRM (Not a lawyer, just happen to know where this one was)

-----Original Message-----
From: Records Management Program [mailto:[log in to unmask]] On Behalf
Of Colgan, Julie J.
Sent: Monday, July 17, 2006 10:38 AM
To: [log in to unmask]
Subject: Re: [RM] Does "must retain" equal "must create"

Ginny Jones wrote:

<If a law or regulation requires certain kinds of information or
communication to be retained, then does that equate in some way to
requiring the information or communication to be created in the first
place?  For example, if a broker has lunch with a client and is told
verbally to take a particular action, is the broker then required to put
that conversation in writing or even tape the conversation during the
lunch?>

Not being a lawyer, I'm not sure I can answer this from the perspective
of true legal requirement ... However I do have an opinion (big shock,
huh?!).

I don't think the law requires meeting minutes to be created per se, but
boy is it a good idea regardless of legal requirement.

If I were the broker, or any kind of professional services provider, and
I were given actionable instruction from a client in a face-to-face
meeting, I most certainly would follow that conversation up with written
confirmation prior to moving forward (and that is exactly what I did
when I was consulting).  In today's litigious society, it is fool-hardy
to think that hand-shake agreements will stand up to any real sort of
test, and in order to protect both my and my client's interest, it falls
upon me to verify the client's wishes prior to execution of any action.

But again, I don't think that any law governing the retention of
recorded information extends to create an obligation to record
information in the first place.

Interesting question, thanks for jump starting my brain!

Julie

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