SEC Compliance for Investment AI

The Challenge: AI in Investment Management

Investment advisers adopting AI face compliance questions that traditional portfolio management systems haven't addressed:

How do you maintain books and records when an analyst asks AI to summarize a deal?
How do you demonstrate what information informed an investment decision?
How do you retain AI conversation logs that discuss material non-public information?
How do you respond to SEC document requests for AI-generated analysis?

Firmly provides the recordkeeping controls and audit evidence your CCO needs.

Rule 204-2: Books and Records

Recordkeeping Requirements

SEC Rule 204-2 requires investment advisers to maintain various books and records. When AI becomes part of your investment process, those interactions may constitute records that must be retained.

Firmly automatically captures every AI interaction with investment data in a tamper-evident audit trail that records:

Who accessed the information
What was accessed (deal documents, portfolio data, research)
When the access occurred
Context for the access (fund, deal team, conversation)
Outcome of the interaction

Retention Periods

Rule 204-2 generally requires retention of books and records for 5 years, with the first 2 years in an easily accessible location. Firmly supports this through:

Configurable retention periods per data type
Firm-level defaults with fund-specific overrides
Automatic archival before deletion
Legal hold capability to preserve records during examinations

Integrity and Authenticity

SEC examiners expect records to be authentic and unaltered. Firmly uses cryptographic chaining to ensure audit records cannot be modified without detection. Any alteration to historical records breaks the chain and is immediately detectable, providing assurance that logs presented to examiners accurately reflect what occurred.

Examination Readiness

Document Production

When responding to SEC document requests, Firmly's audit trail enables you to:

Identify all AI interactions within a specified time period
Filter by fund, personnel, and resource type
Query records via API for document production
Demonstrate the integrity of produced records

Access Controls

Firmly implements user identification tied to all AI interactions:

Every analyst has a unique identifier tied to their AI queries
Firm and fund-based access controls limit which investment data each user can query

Transmission Security

All data transmission between clients and Firmly is encrypted using TLS (Transport Layer Security). Cloudflare enforces TLS on all connections, supporting TLS 1.2 and 1.3.

Implementation Checklist

Configure firm-level retention policies aligned with Rule 204-2
Set up fund-level overrides where investor agreements require longer retention
Define legal hold procedures for SEC examinations
Train investment team on appropriate AI use
Establish audit log review schedule
Document AI recordkeeping in compliance manual