SEC WhatsApp Probe Digs Deeper Into Asset Managers' Personnel
The broad US probe into the use of outside messaging services like WhatsApp at major banks is now sweeping in recordkeepers at big investment firms.
The Securities and Exchange Commission has asked money managers for details on who at their firms oversees retention of electronic communications, according to the request reviewed by Bloomberg News. The query is part of a letter that the regulator sent recently to some of the largest players in the industry seeking information on policies and key staff whose texts and emails are supposed to be archived.
The fresh focus on investment firms signals that more penalties will likely follow after the SEC and the Commodity Futures Trading Commission fined banking giants including JPMorgan Chase & Co. and Bank of America Corp. about $2 billion for their employees using outside messaging platforms to conduct official business.
“It shows that the SEC's probe goes beyond the largest broker-dealers and that it will likely extend to all corners of the financial services sector,” said Howard Fischer, a partner at law firm Moses Singer. “With more and more financial sector workers still not in the office five days a week, and with the increased use of non-official means of communication, the potential scope for liability can be tremendous.”
The SEC declined to comment.
Under SEC rules, money managers face less expansive recordkeeping rules than brokerages, with retention focused on documents related to investment advice. However, like banks, investment firms are required to monitor communications involving their business to head off improper conduct.
The proliferation of mobile-messaging apps has made that more challenging. Compliance systems were strained further as employees
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