Coast to coast
compliance
On August 8, 2023, the U.S. Securities and Exchange Commission (SEC) disclosed charges against 11 entities. The SEC Press Release explains these charges stem from lapses by the firms and their staff in properly maintaining and preserving electronic communications, especially “off-channel” communications, as required by the recordkeeping provisions of the Securities Exchange Act of 1934 and Investment Advisers Act of 1940.
The firms have admitted to breaching recordkeeping regulations and have consented to collectively pay fines exceeding $289 million. Additionally, these firms have initiated enhancements to their compliance protocols and procedures to resolve these issues. The firms admitted that from at least 2019, their employees often communicated through various messaging platforms on their personal devices, including iMessage, WhatsApp, and Signal, about the business of their employers and failed to maintain or preserve the communications. Since the “off-channel” communications were not recorded, this deprived the Commission of potential evidence in several SEC investigations.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement stated, “Compliance with the books and records requirements of the federal securities laws is essential to investor protection and well-functioning markets.”
The firms also agreed to retain independent compliance consultants to, among other things, conduct comprehensive reviews of their policies and procedures relating to the retention of electronic communications found on personal devices and their respective frameworks for addressing non-compliance by their employees with those policies and procedures.
Coast to Coast Compliance can perform an independent review of your firm’s compliance program and assist with the maintenance and review of all electronic communications. We will also propose and implement any necessary safeguards to ensure compliance with various recordkeeping regulations.
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