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

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    JPMorgan Chase & Co.
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WASHINGTON, Oct 12 (Businesshala) – The US Securities and Exchange Commission (SEC) has launched a comprehensive investigation into how Wall Street is tracking bank employees’ digital communications, three people familiar with the matter told Businesshala.

People who spoke on condition of anonymity said that SEC enforcement employees have contacted several banks in recent weeks to find out whether they can use employees’ work-related communications, such as text messages and emails, on their own. Are adequately documented with a focus on individual devices. .

The industry “sweep” is another sign that the SEC is accelerating enforcement under its Democratic leadership, and highlights the challenges Wall Street banks face in tracking employee communications in the pandemic era of work-from-home.

The SEC periodically conducts sweeps to collect information on issues it suspects may be pervasive. Sweeps can sometimes, though not necessarily, lead to a formal investigation.

Without naming the firm, two sources said the sweep stems from an investigation the agency has been conducting for some time at an individual financial institution.

In August, JPMorgan Chase & Company (JPM.N) disclosed that it was making regulatory inquiries regarding “compliance with records protection requirements with respect to business communications sent over electronic messaging channels”, which the bank did not approve. Was. It said it was discussing a “solution” with regulators, without specifying which ones.

Spokespersons for the SEC and JPMorgan declined to comment.

The SEC and the Financial Industry Regulatory Authority, Wall Street’s self-regulatory body, require broker-dealers to keep records of all business-related communications. A source said banks have to tread a fine line to comply with those requirements without violating the privacy of employees.

In the United States, there is no clear legal basis on which an employer can seek to inspect employees’ personal communications, while in other countries doing so may violate data protection statutes, the source said.

As a result, many financial firms ban the use of personal emails, texts and other social media channels for work purposes, but keeping in mind the proliferation of communication apps – especially during the pandemic – is a challenge for companies. .

one in speech Last week, SEC enforcement chief Gurbir Grewal warned that institutions must stay on top of “the many issues raised by the increased use of personal devices, new communication channels and other technological advances”.

Grewal said in the remarks that failure to maintain and furnish communication records could hinder regulatory scrutiny.

Last year, Morgan Stanley (MS.N) fired two top executives for unauthorized use of WhatsApp to discuss work matters.

Editing by Michelle Price and Nick Ziminsky
jodi godoy

Jody Godoy reports on banking and securities law. Reach him at [email protected]


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