SEC examines use of personal digital devices by financial professionals: Reuters

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The U.S. Securities and Exchange Commission (SEC) has launched a broad investigation into how Wall Street banks keep track of employee digital communications, three people familiar with the matter told Reuters.

SEC law enforcement staff have contacted several banks over the past few weeks to verify if they were properly documenting employee work-related communications, such as text messages and emails, putting the ‘focus on their personal devices, said the people, who spoke on condition of anonymity. .

The industry “sweep” is yet another sign that the SEC is stepping up enforcement under its Democratic leadership, and highlights the challenges Wall Street banks face in keeping up with staff communications in the age of work from home pandemic.

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The SEC periodically conducts scans to quickly gather information on issues it suspects may be prevalent. Scans can sometimes, but not necessarily, lead to formal polls.

The sweep appears to have come from an investigation the agency has been carrying out for some time at an individual financial institution, two of the sources said, without naming the company.

In August, JPMorgan Chase & Co. revealed that it had conducted regulatory investigations into its “compliance with record retention requirements for commercial communications sent through email channels” that the bank had not approved. He said he was discussing a “resolution” with regulators, without specifying which ones.

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Spokesmen for the SEC and JPMorgan declined to comment.

The SEC and the Financial Industry Regulatory Authority, Wall Street’s self-regulatory body, require brokers to keep records of all business communications. Banks have to walk a fine line in complying with these requirements without infringing on employee privacy, one of the sources said.

In the United States, there is no clear legal basis on which an employer can require to inspect employees’ personal communications, while in other countries it can violate data protection laws, a said the source.

As a result, many financial companies ban the use of personal emails, text messages, and other social media channels for business purposes, but following a proliferation of communications apps – especially during the pandemic – is a problem. challenge for business.

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In a speech last week, SEC Chief Enforcement Gurbir Grewal warned that institutions should stay on top of the many “issues raised by increased use of personal devices, new channels of communication and other technological developments ”.

Failure to keep and produce communication records may hamper regulatory investigations, Grewal said in the remarks.

Last year, Morgan Stanley fired two senior executives over unauthorized use of WhatsApp to discuss business matters.

(Edited by Michelle Price and Nick Zieminski)

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