Series 79 practice questioneasyBooks and Records Requirements
If a firm stores its books and records electronically, which of the following is a required condition under SEC Rule 17a-4?
- APhysical backup in a different state
- BEncryption is required at all times
- CRecords must be non-rewriteable and non-erasable (WORM format)✓ Correct answer
- DRecords must be posted to the SEC’s EDGAR system
Explanation
Why C — Records must be non-rewriteable and non-erasable (WORM format)
SEC rules require electronic records be stored in WORM format to prevent alterations. The trap is confusing general electronic security with the specific WORM requirement.
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