# Control 1.9: Data Retention and Deletion Policies

**Control ID:** 1.9<br>
**Pillar:** Security<br>
**Regulatory Reference:** SEC 17 CFR 240.17a-3 / 240.17a-4 (broker-dealer recordkeeping), FINRA 4511, FINRA 3110, FINRA RN 24-09, SOX §§302/404 (15 U.S.C. §7262), GLBA 501(b) (15 U.S.C. §6801), 17 CFR 1.31 (CFTC), IRS 26 CFR §1.6001-1 / Rev. Proc. 98-25 (electronic records), litigation-hold duty (FRCP 37(e))<br>
**Last UI Verified:** April 2026<br>
**Governance Levels:** Baseline / Recommended / Regulated<br>

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## Objective

Retain agent-related data — conversation logs, prompts and responses, knowledge-source content, configuration history, and audit metadata — for the periods required by US financial-services recordkeeping rules, then dispose of it under a documented, defensible workflow. This control helps meet SEC 17 CFR 240.17a-4, FINRA 4511, SOX §404, GLBA 501(b), and CFTC 1.31 obligations, and aids in supporting litigation-hold preservation duties under FRCP 37(e). It is **required for** any tenant that hosts agent interactions touching regulated-entity recordkeeping or customer NPI.

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## Why This Matters for FSI

- **SEC 17 CFR 240.17a-4(b)(4) — Communications:**Originals of all communications received and copies of all communications sent (including inter-office memoranda) relating to the broker-dealer's "business as such" must be preserved for **at least 3 years**, the first 2 in an "easily accessible place." AI-mediated chats with customers or in support of trading activity are in scope.
- **SEC 17 CFR 240.17a-4(b)(2)/(3) — Books and records:** Required books and records under 17a-3 must be preserved for **at least 6 years**, the first 2 readily accessible. Where firm activity creates an 17a-3 record (orders, trade tickets, blotters, customer account records), agent transcripts evidencing or generating that record inherit the 6-year clock.
- **SEC 17 CFR 240.17a-4(f) — Electronic storage media (Oct 2022 amendments, compliance date May 3, 2023):** Permits *either* (i) WORM/non-rewriteable, non-erasable storage **or** (ii) an "audit-trail alternative" that maintains a complete time-stamped audit trail of original and modified records, including verifying records, with serialized indexing. Either path additionally requires a Designated Third Party (D3P) undertaking under 17a-4(f)(3)(vii) so that the SEC can obtain records if the firm fails to produce them. **Standard Microsoft 365 retention does not by itself constitute either path** — see "SEC 17a-4(f) caveat" below.
- **FINRA Rule 4511 — Books and records:** Members must preserve books and records for the period specified by SEA Rule 17a-4 (default **6 years** if no other period is specified) and must comply with paragraph (b)(4) of 17a-4 for any records covered there.
- **FINRA RN 24-09 / Rule 3110 — AI guidance:** AI-generated communications must be supervised, archived, and retained under the same books-and-records rules as human-generated communications. The classification (communication vs record) follows function, not the medium that produced it.
- **SEC Reg S-P (2024 amendments, 17 CFR 248.30):** Requires written policies for the proper disposal of customer information and consumer report information, including documentation of disposal actions and incident-response procedures. Disposition workflows must produce evidence of *what* was disposed and *when*.
- **17 CFR 1.31 (CFTC):** "Regulatory records" must be retained for **5 years** from creation, the first **2 years readily accessible**, indexed, and "protected against alteration." Applies to FCMs, swap dealers, IBs, CPOs, CTAs.
- **SOX §404 + §802 (18 U.S.C. §1519, 18 U.S.C. §1520):** Internal-control documentation retention; audit work-paper retention **7 years** (auditor obligation, but issuers must retain underlying records to support the audit). Anti-spoliation rules apply.
- **GLBA 501(b) (15 U.S.C. §6801) and Safeguards Rule (16 CFR Part 314, FTC; 17 CFR Part 248 Subpart A, SEC):** Protect customer NPI throughout its lifecycle, including disposal. Retention policies must coexist with NPI safeguards.
- **IRS 26 CFR §1.6001-1 / Rev. Proc. 98-25:** Records that support tax positions retained generally **7 years**; electronic records must be retrievable in machine-sensible form throughout the period.
- **Litigation-hold duty (FRCP 37(e), common-law spoliation doctrine):** Once litigation is reasonably anticipated, retention/disposition must be suspended through a legal hold. Sanctions for spoliation include adverse-inference instructions and case-terminating sanctions.

!!! warning "SEC 17a-4(f) caveat — read before claiming WORM compliance"
    Microsoft Purview **Preservation Lock** prevents administrators from disabling, deleting, or shortening a retention policy and can only have locations added or retention extended after locking. Microsoft positions Preservation Lock as supporting compliance with 17a-4(f) when correctly configured *and* when the customer obtains a third-party assessment. **Microsoft does not act as the broker-dealer's Designated Third Party (D3P)** under 17a-4(f)(3)(vii); the D3P undertaking is a separate engagement that the firm must arrange with a qualified vendor. Treat any "WORM" claim as the firm's responsibility to validate with counsel and the firm's compliance consultant. See [Microsoft Learn: Regulatory requirements for retention](https://learn.microsoft.com/en-us/purview/retention-regulatory-requirements) and [SEC Final Rule 34-96034](https://www.sec.gov/rules/final/2022/34-96034.pdf).

!!! note "Communications vs. records classification — get this from counsel"
    Whether an agent transcript is classified as a **communication** (3 years per 17a-4(b)(4)) or a **book/record** (6 years per 17a-4(b)(2)–(3) and FINRA 4511) depends on the agent's function and whether its output is used in creating an 17a-3 record. When the classification is ambiguous, apply the **longer** period and document the rationale in the firm's Written Supervisory Procedures (WSPs).

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!!! tip "Automation Available"
    See [DR Testing Framework](https://github.com/judeper/FSI-AgentGov-Solutions/tree/main/dr-testing-framework) in FSI-AgentGov-Solutions for automated disaster recovery testing for AI agent infrastructure.


## Control Description

This control combines four Microsoft Purview surfaces and one Power Platform surface to retain, immobilize, and defensibly dispose of agent data:

| Capability | Microsoft surface | Description |
|------------|-------------------|-------------|
| Retention labels | Purview > Solutions > Records Management & Data Lifecycle Management | Item-level retention applied by classification (manual, auto-apply, or default for a SharePoint library). Labels can mark items as **records** (locked retention) or **regulatory records** (immutable — cannot be unmarked, retention cannot be reduced). |
| Retention policies | Purview > Solutions > Data Lifecycle Management > Policies | Container-level retention scoped by location (Exchange, SharePoint, OneDrive, Microsoft 365 Groups, Teams chats/channels, Viva Engage, Microsoft Copilot experiences, Enterprise AI apps, Other AI apps). New Copilot / AI-app retention policies are separate from Teams chats; older policies might still show legacy combined naming. Adaptive scopes are recommended over static for dynamic targeting. |
| Preservation Lock | `Set-RetentionCompliancePolicy -RetentionComplianceLockType Lock` (Security & Compliance PowerShell) | Irreversibly locks a retention policy: no admin (including Global Admin) can disable, delete, or shorten it. Only **adding** locations or **extending** retention is permitted. This is the surface Microsoft positions for SEC 17a-4(f)-aligned immutability. |
| eDiscovery / Litigation hold | Purview > Solutions > eDiscovery (Standard / Premium); Exchange In-Place Hold (legacy) | Preserves content in scope of a case beyond retention rules. Overrides retention disposition for the duration of the hold. |
| Disposition review | Purview > Solutions > Records Management > Disposition | Multi-stage reviewer workflow at retention end (supports SharePoint, OneDrive, Exchange items with retention-label-driven retention). Produces an audit trail of disposition decisions. |
| Dataverse long-term retention | Power Platform Admin Center > Environments > Dataverse > Long-term retention | Per-table archival for Microsoft Copilot Studio agent transcripts (e.g., `botcomponent`, `botsession`, `conversationtranscript` and Copilot Studio interaction tables); separate from Purview retention. |
| Audit trail of deletion | Microsoft 365 Audit (Purview > Audit) | Records `FileDeleted`, `HardDelete`, `SoftDelete`, retention-label apply/remove, policy create/modify/delete. Should be retained at least as long as the underlying records (see Control 1.7). |

---

## Key Configuration Points

- **Build the retention schedule first, then configure.** Get counsel sign-off on per-record-type periods (communications vs. books-and-records, customer NPI, audit metadata, model documentation). Document in WSPs before touching the portal.
- Create retention labels per record type (recommended Zone 3 baselines):
    - Agent conversation transcripts (communications classification): **3 years minimum**, first 2 readily accessible (17a-4(b)(4))
    - Agent transcripts that evidence or generate an 17a-3 record: **6 years**, first 2 readily accessible (17a-4(b)(2)–(3), FINRA 4511)
    - Agent configuration and version history: **6 years** (mirrors books-and-records exposure)
    - Agent audit metadata (sign-ins, action audit, deletion events): **7–10 years** (covers SOX §802 audit-work-paper window and overlapping multi-regulator inquiries)
- Publish labels to the full set of in-scope locations: **Exchange email**, **SharePoint sites**, **OneDrive accounts**, **Microsoft 365 Groups**, **Teams channel/private/standard messages**, **Viva Engage communities**, and **Loop workspaces**. Use retention policies—not Teams label scopes—to govern Copilot and AI-app interactions in the AI-specific locations below.
- Create retention policies for AI interaction surfaces using the current Purview AI-specific locations. New Copilot / AI-app retention policies are separate from **Teams chats**; older policies might still display legacy combined naming such as **Teams chats and Copilot interactions**.
    - **Microsoft Copilot experiences** — covers Microsoft 365 Copilot, Security Copilot, Copilot in Fabric, and Copilot Studio
    - **Enterprise AI apps** — covers Entra-registered AI apps, ChatGPT Enterprise, and Microsoft Foundry
    - **Other AI apps** — covers ChatGPT, Google Gemini, Microsoft Copilot consumer, and DeepSeek where captured through supported collection or retention policies
- Configure **Dataverse long-term retention** in Power Platform Admin Center for Copilot Studio environments to archive agent transcripts beyond the active environment retention window.
- **Apply Preservation Lock** (`Set-RetentionCompliancePolicy -RetentionComplianceLockType Lock`) on every Zone 3 retention policy after a CAB-approved change window. This is irreversible — see "Locked-policy gotchas" in the PowerShell playbook.
- Use **adaptive scopes** (driven by Entra group, department, country, or custom attribute) rather than static scopes for any policy that targets a population that changes over time.
- Note: Disposition review applies to retention-label-driven retention on Exchange / SharePoint / OneDrive content. **Copilot interaction and Dataverse transcript retention use policy-based controls without reviewer-driven disposition** — plan defensible deletion evidence accordingly.
- Stand up a documented **legal-hold intake process** with eDiscovery (Standard or Premium) so litigation preservation can be applied within hours of a triggering event.
- Configure extended **audit log retention** for deletion events (see Control 1.7); the audit trail of disposition is itself a record.
- Implement **storage tiering** to satisfy the "readily/easily accessible" requirement (see table below) without paying hot-tier prices for years 3+.

### Storage Tier Requirements ("Readily/Easily Accessible")

SEC 17a-4 and FINRA 4511 require records to be "readily accessible" (SEC) or "easily accessible" (FINRA) for the first 2 years:

| Storage Tier | Access Time | Use For | Implementation |
|-------------|-------------|---------|----------------|
| **Hot Storage** | Immediate | First 2 years of retention | SharePoint Online, Exchange Online |
| **Cool Storage** | Minutes | Years 3+ of retention | Azure Blob Cool Tier |
| **Archive Storage** | Hours | Long-term archive (after primary period) | Azure Blob Archive Tier |

!!! warning "Readily Accessible Definition"
    "Readily accessible" means records can be produced **promptly** upon regulatory request. For practical purposes:

    - **First 2 years:** Records should be retrievable within hours
    - **Years 3+:** Records should be retrievable within reasonable business days

    Configure automated tiering to move records to Cool storage after 2 years while maintaining search/retrieval capability.

---

## Zone-Specific Requirements

| Zone | Requirement | Rationale |
|------|-------------|-----------|
| **Zone 1** (Personal) | 1-year minimum conversation retention; automatic deletion at end of period; no Preservation Lock required; standard Purview audit retention. | Sandbox / personal productivity scope; minimal regulatory exposure provided NPI handling and customer-facing functions are explicitly out of scope. |
| **Zone 2** (Team) | 3-year retention (matches 17a-4(b)(4) communications floor); disposition review enabled with manager + records-management approval; standard Purview retention policies *unlocked* but change-controlled via CAB; Dataverse long-term retention enabled. | Departmental collaboration; possible inadvertent contact with customer-facing or supervisory communications — apply communications-floor retention by default. |
| **Zone 3** (Enterprise) | 6-year retention as the baseline (17a-4(b)(2)–(3) / FINRA 4511); 7–10 years for audit metadata (SOX §802); **regulatory-record labels** (`-Regulatory $true`) on records-classified content; **Preservation Lock** applied to every retention policy and label policy; eDiscovery hold playbook documented with named hold custodians; D3P undertaking arranged with a qualified vendor for any 17a-4(f) attestation. | Maximum regulatory protection; surfaces directly subject to broker-dealer recordkeeping, SOX §404 internal-control evidence, and CFTC 1.31 obligations. |

---

## Roles & Responsibilities

| Role | Responsibility |
|------|----------------|
| Purview Records Manager | Retention label and label-policy authoring; records / regulatory-records flagging; disposition workflow configuration |
| Purview Compliance Admin | Retention policy authoring; policy distribution monitoring; Preservation Lock application (with CAB approval) |
| Compliance Officer | Regulatory retention requirements; classification of agent transcripts (communication vs record); disposition review approval |
| Legal / General Counsel | Legal-hold issuance, scope, custodian identification, and release; D3P arrangement for 17a-4(f) attestation |
| Purview eDiscovery Roles | Hold creation in eDiscovery cases; preservation status export for evidentiary use |
| Power Platform Admin | Dataverse long-term retention configuration for Copilot Studio environments; environment-level retention defaults |
| Exchange Online Admin | Mailbox-level In-Place / Litigation Hold (legacy) where eDiscovery hold is not practical; mailbox audit retention |
| Purview Audit Admin | Audit-log retention policy for deletion / disposition events (coordinate with Control 1.7) |

---

## Related Controls

| Control | Relationship |
|---------|--------------|
| [1.7 - Audit Logging](1.7-comprehensive-audit-logging-and-compliance.md) | Audit log retention |
| [4.3 - SharePoint Retention](../pillar-4-sharepoint/4.3-site-and-document-retention-management.md) | SharePoint-specific retention |
| [2.13 - Documentation](../pillar-2-management/2.13-documentation-and-record-keeping.md) | Documentation requirements |
| [1.5 - DLP and Sensitivity Labels](1.5-data-loss-prevention-dlp-and-sensitivity-labels.md) | Sensitivity labels integration |
| [2.4 - Business Continuity](../pillar-2-management/2.4-business-continuity-and-disaster-recovery.md) | DR testing validates backup integrity ([DR Testing Framework](https://github.com/judeper/FSI-AgentGov-Solutions/tree/main/dr-testing-framework)) |

---

## Implementation Playbooks

!!! info "Step-by-Step Implementation"

    This control has detailed playbooks for implementation, automation, testing, and troubleshooting:

    - [Portal Walkthrough](../../playbooks/control-implementations/1.9/portal-walkthrough.md) — Step-by-step portal configuration
    - [PowerShell Setup](../../playbooks/control-implementations/1.9/powershell-setup.md) — Automation scripts
    - [Verification & Testing](../../playbooks/control-implementations/1.9/verification-testing.md) — Test cases and evidence collection
    - [Troubleshooting](../../playbooks/control-implementations/1.9/troubleshooting.md) — Common issues and resolutions

---

## Verification Criteria

Confirm control effectiveness by verifying:

1. Written retention schedule exists, is signed off by counsel, and maps each record type to a regulatory citation (17a-4(b)(2), 17a-4(b)(4), FINRA 4511, SOX §802, CFTC 1.31, GLBA 501(b), IRS).
2. All FSI retention labels exist in Purview with the planned duration, action, and (for Zone 3 record-classified content) `IsRecordLabel = True` and/or `Regulatory = True`.
3. Label policies are published to all required locations (Exchange, SharePoint, OneDrive, Microsoft 365 Groups, Teams chats/channels, Viva Engage); distribution status reads **Success** in the portal.
4. Retention policies for **Microsoft Copilot experiences**, **Enterprise AI apps**, and **Other AI apps** exist and are distributed separately from Teams chat policies; any older legacy combined naming is mapped in the evidence binder.
5. Preservation Lock is applied to every Zone 3 retention policy (`RetentionComplianceLockType = Lock`) and the lock is verified out-of-band with PowerShell evidence.
6. Test deletion of labeled / scoped content is **blocked** during the retention period, and the block reason is logged in the unified audit log.
7. Disposition-review workflow triggers at retention end for label-driven content and produces a reviewer audit trail.
8. eDiscovery / Litigation hold prevents disposition for content in scope of an active case, even when retention would otherwise dispose of it.
9. Audit log captures `FileDeleted`, `HardDelete`, `SoftDelete`, retention-label apply/remove, and retention-policy create/modify/delete events with at least the same retention as the underlying records.
10. Dataverse long-term retention is configured for Copilot Studio environments and verified by archiving a test transcript table.
11. Storage-tiering plan documents how content moves from hot to cool/archive at the 2-year boundary while remaining retrievable within reasonable time for SEC / FINRA examiners.

---

## Additional Resources

- [Microsoft Learn: Learn about retention policies and retention labels](https://learn.microsoft.com/en-us/purview/retention)
- [Microsoft Learn: Create and configure retention policies](https://learn.microsoft.com/en-us/purview/create-retention-policies)
- [Microsoft Learn: Create retention labels for data lifecycle management](https://learn.microsoft.com/en-us/purview/create-retention-labels-data-lifecycle-management)
- [Microsoft Learn: Records management — Mark items as records / regulatory records](https://learn.microsoft.com/en-us/purview/records-management)
- [Microsoft Learn: Use Preservation Lock to restrict changes to retention policies and retention label policies](https://learn.microsoft.com/en-us/purview/retention-preservation-lock)
- [Microsoft Learn: Disposition of content](https://learn.microsoft.com/en-us/purview/disposition)
- [Microsoft Learn: Learn about retention for Microsoft Copilot and AI apps](https://learn.microsoft.com/en-us/purview/retention-policies-copilot)
- [Microsoft Learn: Create eDiscovery holds](https://learn.microsoft.com/en-us/purview/ediscovery-create-holds)
- [Microsoft Learn: Regulatory requirements for information governance (incl. SEC 17a-4)](https://learn.microsoft.com/en-us/purview/retention-regulatory-requirements)
- [Microsoft Learn: Manage long-term retention for Dataverse](https://learn.microsoft.com/en-us/power-apps/maker/data-platform/data-retention-overview)
- [SEC Final Rule 34-96034: Electronic Recordkeeping Requirements for Broker-Dealers (Oct 2022)](https://www.sec.gov/rules/final/2022/34-96034.pdf)
- [FINRA Rule 4511 (Books and Records)](https://www.finra.org/rules-guidance/rulebooks/finra-rules/4511)

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*Updated: May 2026 | Version: v1.6.2 | UI Verification Status: Current*
