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SEC a written undertaking pursuant to SEA Rule 17a-4(i)(1)(i) (“Traditional
Undertaking”) to the effect that the records in question are the property of,
the broker-dealer, and such records will be surrendered promptly on request
of the respective broker-dealer. The Traditional Undertaking also must
include a provision whereby the third party agrees to, among other things,
permit examination of the records by representatives or designees of the
SEC, and to furnish them promptly. Traditional Undertaking must be signed
by a duly authorized person and be in a form acceptable to the SEC.
Alternative Undertaking
A third-party service provider may instead of the Traditional Undertaking file
with the SEC an undertaking pursuant to SEA Rule 17a-4(i)(1)(ii) (“Alternative
Undertaking“) if the required records are maintained and preserved by
means of an electronic recordkeeping system, as defined in SEA Rule 17a-4(f),
utilizing servers or other storage devices that are owned or operated by the
third party (including an affiliate of the broker-dealer) and the broker-dealer
has “independent access” to the records, as defined in SEA Rule 17a-
4(i)(1)(ii)(B). The term “independent access” means having the ability to
regularly access the records without the need of any intervention of the
outside entity and through such access: (1) permit examination of the
records at any time or from time to time during business hours by
representatives or designees of the Commission; and (2) promptly furnish to
the Commission or its designee a true, correct, complete and current hard
copy of any or all or any part of such records.
As is the case with the Traditional Undertaking, the Alternative Undertaking
must be signed by a duly authorized person and be in a form acceptable to
the SEC. The ability to provide the Alternative Undertaking does not apply
when the third party maintains records in a paper format or on micrographic
media.
As part of the Alternative Undertaking, the third-party service provider must
acknowledge that the records are the property of the broker-dealer, and that the
broker-dealer has represented to the recordkeeping service that the broker-dealer:
(1) is subject to Commission rules governing the maintenance and preservation of
certain records; (2) has independent access to the records maintained by the third
party; and (3) consents to the third party fulfilling the obligations set forth in the
Alternative Undertaking. Additionally, the third-party service provider must
undertake to facilitate within its ability, and not impede or prevent: (1) the