Special Report-SEC Investigates Digital Communication in Wall Street Banks

The U.S. Securities and Exchange Commission (SEC) has started an inquiry investigating how Wall Street banks keep track of their employees’ digital communications. SEC has contacted several Wall Street banks recently to investigate whether they have been adequately recording their staff’s digital communications, particularly via their personal devices.

SEC’s effort is seen more of a “sweep” than a formal investigation for the time being. It indicates the challenges Wall Street faces to keep track of staff communications during the work from home era. SEC makes such sweeps to gather information on issues it thinks are widespread.

SEC decided to broaden the range of its sweep after an investigation into an individual financial institution.

Last August, JP Morgan Chase revealed that it was responding to regulatory inquiries about its “records preservation in connection to digital business communications.” The bank said it didn’t approve it, but was willing to find a resolution with the regulators.

The SEC requires all Wall Street financial firms to keep records of all business communications. The firms find it hard to keep the regulators happy and not violating their employees’ privacy at the same time.

There is not a clear legal framework which defines the employer’s rights to inspect employees’ personal communications in the United States, contrary to other countries. The firms usually ban their employees to use personal communication channels for work related issues, but they also try to keep up with new communication channels, particularly during the work from home period.

SEC wants the firms to keep up with these new modes of communication as failure to record these communications can result in regulatory investigations and fines.

Last year, Morgan Stanley fired two top executives for using Whatsapp for work related communication.

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