Securities and Exchange Commission (SEC)C’s Investigation
The U.S. SEC is investigating Wall Street investment company employees’ chat messages to confirm how widely they used personal messaging apps to discuss business.
Legacy communication platform providers like Microsoft and Google offer enterprise products tailored to meet these very needs.
During the pandemic years, as employees began using personal messaging apps and services for work-related reasons.
Securities and Exchange Commission (SEC)C’s Investigation
The Commission has brought 30 enforcement actions and ordered over $1.5 billion in penalties to drive this foundational message.
In the latest case reported by Reuters, some of the targeted companies include Carlyle, Apollo, KKR, TPG, and Blackstone.
The SEC has not commented on its actions yet or confirmed it charged more companies over record keeping failures.
Consequences of record-keeping failures
Regulatory penalties: SEC can impose significant fines on firms that fail to comply with record-keeping requirements. In recent years, the SEC has imposed billions of dollars in fines.
Damage to reputation: Record-keeping failures can damage a firm's reputation and make it more difficult to attract clients and investors.
Increased risk of fraud and abuse: Record-keeping failures can make it easier for employees to commit fraud and abuse, such as inside trading and insider dealing.
Consequences of record-keeping failures
Difficulty in investigating misconduct : Make it more difficult for the SEC and other regulators to investigate misconduct by Wall Street firms.
Harm to investors: Can harm investors by making it more difficult to track their investments and to protect their rights.
Challenges associated with end-to-end encrypted messaging apps
Regulatory compliance: Wall Street firms are subject to a number of regulations, record-keeping and supervision. End-to-end encrypted messaging apps can make it difficult for firms to comply with these regulations.
Security risks: if an employee's device is lost or stolen, the contents of their messages could be accessed by unauthorized individuals.End-to-end encrypted messaging apps can be used to spread malware and phishing attacks.
eDiscovery: In the event of a lawsuit or investigation, firms may be required to produce electronic records, including communications on end-to-end encrypted messaging apps.
Internal communications: Makes it difficult for firms to communicate internally. if a firm wants to monitor employee communications.
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