Use Exchange Online and the Security & Compliance Center to comply with SEC Rule 17a-4

If your organization needs to comply with regulatory standards for retaining your data, the Office 365 Security & Compliance Center provides features to manage the lifecycle of your data in Exchange Online. This includes the ability to retain, audit, search, and export your data. These capabilities are sufficient to meet the needs of most organizations.

However, some organizations in highly regulated industries are subject to more stringent regulatory requirements. For example, financial institutions such as banks or broker dealers are subject to Rule 17a-4 issued by the Securities and Exchange Commission (SEC). Rule 17a-4 has specific requirements for electronic data storage, including many aspects of record management, such as the duration, format, quality, availability, and accountability of records retention.

To help these organizations better understand how the Security & Compliance Center can be leveraged to meet their regulatory obligations for Exchange Online, specifically in relation to Rule 17a-4 requirements, we have released an assessment in partnership with Cohasset Associates.

Cohasset validated that when Exchange Online and the Security & Compliance Center are configured as recommended, they meet the relevant storage requirements of CFTC Rule 1.31(c)-(d), FINRA Rule 4511, and SEC Rule 17a-4. We targeted this set of rules because they represent the most prescriptive guidance globally for records retention for financial institutions.

Download the Cohasset assessment

You can download the Cohasset assessment here.

Title page of downloadable assessment by Cohasset Associates

This assessment is specific to Exchange Online

Note that this assessment is specific to Exchange Online. The assessment does not include other Office 365 services such as SharePoint Online or OneDrive for Business, although we are planning support for those services with respect to SEC 17a-4 in the future.

It’s important to understand that Skype for Business and Teams also store data in Exchange Online. Therefore, the assessment does cover messages from Skype for Business and channel and chat messages from Teams.

Highly regulated industries are often required to store electronic communications to meet the WORM (write once, read many) requirement. The WORM requirement dictates a storage solution in which a record must be:

  • Retained for a required retention period that cannot be shortened, only increased.
  • Immutable, meaning that the record cannot be overwritten, erased, or altered during the required retention period.

In Exchange Online, when a retention policy is applied to a user's mailbox, all of the user's content will be retained based on the criteria of the policy. In fact, if a user attempts to delete or modify an email, a copy of the email before the change is made will be preserved in a secure, hidden location in the user's mailbox. Retention polices can ensure that an organization retains electronic communications, but those policies can be modified.

By placing a Preservation Lock on a retention policy, an organization ensures that the policy cannot be modified. In fact, after a Preservation Lock is applied to a retention policy, the following actions are restricted:

  • The retention period of the policy can only be increased, not shortened.
  • Users can be added to the policy, but no user can be removed.
  • The retention policy cannot be deleted by an administrator.

Preservation Lock can help you meet the SEC 17a-4 regulatory requirements.

How to set up Preservation Lock

You can lock a retention policy by using PowerShell. For more information, see Locking a retention policy.

Known limitations

We’re aware of a few limitations in Exchange Online. We’re actively working on these and expect to release support for these scenarios in July 2019:

  • Item-level auditing is not available in Office 365 Group mailboxes.
  • Threaded communications are not available for Teams chat and channel messages.
  • Likes are not retained for Teams chat and channel messages.