Smarsh is an Electronic Message Archiving & Compliance Provider, founded in 2001 in New York City as a cutting-edge technology provider for financial firms of all sizes Today, we’re a company of 175 people… offices in 5 cities… Billions of messages archived…hundreds of millions captured monthly Archiving & Compliance – Capture, search, supervise, produce & presevrve Web-based, fully-hosted, Software-as-a-Service (SaaS) FINRA/SEC specialty… Emphasis on customer service and the highest levels of data security and privacy Differentiate from archiving for storage – we archive for compliance - Feature-rich surveillance, review and retrieval tools (differentiated at the high-end of the market)… serve as a 3rd party download to satisfy 17a4 Examination/track record Commitment to perpetual innovation Our goal is to ARCHIVE EVERYTHING. Give clients the archiving/compliance support necessary to use the tools they want to to grow business…

Smarsh surveyed financial services compliance professionals to understand the state of electronic communications compliance. Firm type 22-question online survey Fielded January-April 2012 209 respondents with compliance-related responsibilities Addressed trends in electronic message compliance policies and practices: Understanding of regulatory obligations Policies and use of different communications types Policies and use of different communications devices Supervision and archiving practices Examination frequency and expectations Confidence in compliance policies and enforcement Smarsh hosts an annual survey of compliance professionals on their practices surrounding retention and oversight of electronic communications. I’m going to share some of the themes and challenges that came out of the data on some topics that are near and dear to our heart… Topics of the survey itself: Policies surrounding different communication types Supervision/archiving practices Examination frequency & expectations Priorities w/ limited resources Confidence in process NEW REPORT – 2013 version – Coming later this month! To set the environment, two key points: Firms are facing more scrutiny than ever – Dodd-Frank, new sophisticated examination practices, more frequent examinations (private funds!) Environment around electronic comms is more complex than ever – BYOD, social media platforms emerging No surprise that our data shows that time/money spent on electronic communications compliance continues to rise (60& expected their resource needs to increase in the year ahead), even though it is only one area of responsibility (smaill… but critical) for thinly-stretched compliance depts. Want to share two slides/topics of discussion…

Concerns come from multiple fronts. Top Concerns Related to Electronic Message Compliance Concerns come from multiple fronts… Mentioned regulatory environment’s complexity and scrutiny… On top of that… Communications channels, being driven in many cases by end-users (not IT or compliance). Blurry line between business and personal use, very difficult to govern. Some choose prohibition, but if you choose this, you still have to show that that policy is effective! Devices… so then you can also send social media emssages on your mobile devices. And email, and texts,. And Ims… And many fo these devices are items people are using in their personal lives.

21% trust friends, colleagues or relatives 21% rely on TV and radio talk shows 20% depend most on news-related websites 11% rely most on newspapers 33% consider social media a valuable source of financial information (27% Gen X, 21% BB, 14% Silent) Source: TD Ameritrade Study

The Compliance Burden Compliance professionals are looking for peace of mind when selecting an archiving and supervision technology system. Very or critically important Important attributes of an archiving and supervision technology system when designing a comprehensive electronic message compliance program We asked out respondents what were the most critical attributes of an archiving/monitoring supervision system… see how the results clustered, grouped the results PEACE OF MIND IS THE DRIVING FORCE – the must haves… data security, uptime/reliability CONVENIENCE – the nice to haves – less time spent reviewing email (without sacrificing effectiveness), the better… support, easy to use, feature efficiency BOTTOM LINE group - cost VALUE is more important than COST; COST is more than the sticker price. Cost of monitoring is high, not due to the software or hardware or service costs, but rather the time involved. The cost of a professional to monitor is much more expensive than any one set of tools. Which is why the ROI is always going to be about how the system enhances effectiveness and increases efficiency. If the solution simply, “checks a box” you are penny wise and pound foolish. What is it all add up to? Compliance professionals have an increasing burden. More & more sophisticated regulatory scrutiny. New devices, channels of communication. Need to do more with less, rely on tech that can help them do their jobs faster and more effectively.