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 Trade Fee (SEC) has opened a broad inquiry into how Wall Road banks are retaining observe of workers’ digital communications, three folks aware of the matter advised Reuters.

SEC enforcement workers contacted a number of banks in current weeks to test whether or not they have been adequately documenting workers’ work-related communications, corresponding to textual content messages and emails, with a concentrate on their private gadgets, stated the folks, who spoke on the situation of anonymity.

The trade “sweep” is an extra signal that the SEC is ramping up enforcement underneath its Democratic management, and highlights the challenges Wall Road banks face retaining observe of workers communications within the work-from-home pandemic period.

The SEC periodically conducts sweeps to shortly collect data on points it suspects could also be widespread. Sweeps can typically, though not essentially, result in formal probes.

The sweep seems to stem from a probe the company has been conducting for a while into a person monetary establishment, two of the sources stated, with out naming the agency.

In August, JPMorgan Chase & Co disclosed that it had been fielding regulatory inquiries regarding its “compliance with data preservation necessities in reference to enterprise communications despatched over digital messaging channels” that the financial institution had not permitted. It stated it was discussing a “decision” with regulators, with out specifying which of them.

Spokespeople for the SEC and JPMorgan declined to remark.

The SEC and the Monetary Trade Regulatory Authority, Wall Road’s self-regulatory physique, require broker-dealers to maintain data of all business-related communications. Banks need to stroll a advantageous line to adjust to these necessities with out infringing upon workers’ privateness, stated one of many sources.

In the USA, there isn’t a clear-cut authorized foundation on which an employer can demand to examine workers’ private communications, whereas in different international locations doing so could breach information safety statutes, the supply stated.

In consequence, many monetary corporations ban using private e-mail, texts and different social media channels for work functions, however maintaining with a proliferation of communication apps — particularly in the course of the pandemic — is a problem for corporations.

In a final week, the SEC’s head of enforcement Gurbir Grewal warned that establishments ought to keep on high of the numerous “points raised by the elevated use of private gadgets, new communications channels, and different technological developments.”

Failure to retain and produce communication data can impede regulatory investigations, Grewal stated within the remarks.

Final 12 months, Morgan Stanley two high executives because of the unauthorized use of WhatsApp to debate work issues.

Modifying by Michelle Worth and Nick Zieminski

Jody Godoy

Jody Godoy reviews on banking and securities legislation. Attain her at

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