FINRA 4511 Compliance with Concentric AI

July 5, 2023
Cyrus Tehrani
3 min read

What is the FINRA rule?

The Financial Industry Regulatory Authority (FINRA) Rule 4511 is a regulatory notice that standardizes record-keeping practices in the United States financial services industry. Introduced on December 5, 2011, the rule aims to standardize the processing of records and simplify access for regulators. In doing so, the processing and handling of data should be safer and more secure.

What are the rule’s functions?

The rule is comprised of two main functions: record making and record preservation. Record making ensures that records, including account names, customer complaint information, e-signatures and approvals, and negotiable instruments, are made in accordance with standard practice. If records are made and kept by a third party, the outsourcing must also align with FINRA 4511 regulations.

Record preservation is more complex, however. It requires a minimum retention period of six years for records, which can be stored on paper, micrographic materials, or online as electronic records. Micrographic and digital storage methods must also meet specific requirements — including clear communication about electronic storage methods, official electronic storage media representation, and audit capabilities. For brokerage firms, duplicate copies of records should be kept separately from the original and all electronic communication records should be indexed into an organized system.

FINRA 4511 also specifies that records should be preserved in formats and media that comply with the regulation. The compliant formats are to simplify both internal operations and external investigators to access and understand your data.

Who does the rule apply to and what are the penalties?

FINRA 4511 applies to broker-dealers, securities firms, funding portals, and financial institutions involved in capital acquisitions.

Violations of the rule can result in sanctions and penalties, including financial penalties for compensation of wronged customers or the discharge of individual brokers by the Securities and Exchange Commission (SEC).

How Concentric helps you with FINRA compliance

Concentric AI offers comprehensive PII (Personally Identifiable Information) data discovery and categorization, which helps companies comply with the record-making aspect of FINRA 4511.

For accurate record keeping, you need to know what data you have and where that data resides. Concentric leverages advanced machine learning to autonomously scan and categorize data, including PII, wherever it is stored. Financial data lives everywhere: on premises, in the cloud, structured and unstructured — but Concentric provides you with a clear view of all your data. With Concentric, you will know where your sensitive financial data lives and how it should be categorized — an essential part of compliance with FINRA 4511.

Concentric can also help when it comes to record preservation, as our solution provides autonomous risk monitoring. What this means is you can discover how sensitive financial data is being used, who it is being shared with, and who accessed it. This can help to quickly and accurately pinpoint risk from inappropriate permissioning, risky sharing, or unauthorized access.

More than just compliance

Our customers are successfully using our product in production for petabytes of data for:

Book a demo today to see firsthand — with your own data — how Concentric’s solution can quickly and easily be deployed to keep up with FINRA rules in your organization.




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