August 11, 2022


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EXCLUSIVE U.S. SEC opens inquiry into Wall Street banks’ staff communications -sources

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WASHINGTON, Oct 12 (Reuters) – The U.S. Securities and Exchange Fee (SEC) has opened a wide inquiry into how Wall Street financial institutions are trying to keep track of employees’ electronic communications, a few individuals familiar with the matter told Reuters.

SEC enforcement staff contacted numerous banking institutions in latest weeks to check out whether they have been sufficiently documenting employees’ function-connected communications, this kind of as text messages and email messages, with a concentration on their individual gadgets, explained the people, who spoke on the issue of anonymity.

The industry “sweep” is a even more sign that the SEC is ramping up enforcement less than its Democratic management, and highlights the troubles Wall Road banks facial area trying to keep observe of team communications in the work-from-property pandemic era.

The SEC periodically conducts sweeps to swiftly collect details on problems it suspects may possibly be common. Sweeps can in some cases, even though not necessarily, lead to official probes.

The sweep seems to stem from a probe the company has been conducting for some time into an personal financial establishment, two of the resources reported, without the need of naming the business.

In August, JPMorgan Chase & Co (JPM.N) disclosed that it experienced been fielding regulatory inquiries concerning its “compliance with information preservation prerequisites in relationship with company communications despatched above digital messaging channels” that the financial institution had not authorized. It explained it was speaking about a “resolution” with regulators, with out specifying which ones.

Spokespeople for the SEC and JPMorgan declined to remark.

The SEC and the Economical Field Regulatory Authority, Wall Street’s self-regulatory system, need broker-dealers to keep data of all business-relevant communications. Banks have to stroll a high-quality line to comply with those prerequisites without infringing on employees’ privateness, claimed a person of the sources.

In the United States, there is no crystal clear-slash legal basis on which an employer can demand from customers to examine employees’ particular communications, when in other nations performing so may possibly breach details security statutes, the resource explained.

As a result, numerous monetary corporations ban the use of private electronic mail, texts and other social media channels for work uses, but maintaining up with a proliferation of conversation apps — primarily all through the pandemic — is a challenge for firms.

In a speech very last week, the SEC’s head of enforcement Gurbir Grewal warned that establishments really should remain on top rated of the quite a few “troubles lifted by the amplified use of private equipment, new communications channels, and other technological developments.”

Failure to keep and create communication documents can impede regulatory investigations, Grewal said in the remarks.

Previous yr, Morgan Stanley (MS.N)fired two major executives thanks to the unauthorized use of WhatsApp to examine function issues.

Modifying by Michelle Cost and Nick Zieminski