Communications Compliance: The SEC Crackdown Begins

Communications Compliance: The SEC Crackdown Begins

We knew that it wouldn’t be long before regulatory authorities began flexing their enforcement muscles. COVID isn’t contained, but, nearly two years into the pandemic, we’ve more or less learned to live with the virus. That said, the authorities appear to be in general agreement when it comes to their efforts to begin ratcheting up Electronic Communications compliance.

Communications Compliance-SEC Crackdown Begins

The sweep has started Reuters reported on 12-October-2021 that the SEC had begun its sweep on Wall Street. Three anonymous sources alleged that numerous banks have recently been contacted by SEC enforcement agents. Purportedly, the check-ins weren’t social calls: it appears that the SEC has begun formally inquiring how banks are tracking employees’ e-Communications, particularly on personal devices

The rules are…

Two of Morgan Stanley’s most senior executives in commodities were ousted from the firm about this time last year (Autumn 2020). Both had been corresponding about work matters on WhatsApp despite clear policy – but no law – prohibiting them from doing so

What’s The SEC’s Official Position On All This?

Gurbir Grewal, Director, Division of Enforcement, gave a speech on October 6, 2021, regarding broker-dealer regulation and enforcement. One of the main themes that were echoed through the speech was the notion of market integrity and public confidence being “our” collective responsibility. That’s an interesting twist. He said, “So rather than issue warnings about how aggressively we will pursue you or your clients if you misbehave—which we, of course, will—I want to invite each of you—the lawyers, counselors, and gatekeepers who have such influence over market behavior—to join me.”

Ambiguity is a funny thing. It can work for – or against you – it all depends on which side of the law you’re on. When it comes to a matter of who’s going to win that battle, my bet is on the SEC. But at least they’ve warned us that they’re coming … let the crackdown games begin.

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