SEC scrutiny into communications shifts to investment funds
(Reuters) — The U.S. Securities and Exchange Commission’s scrutiny of how Wall Street handles work-related communications on personal devices and apps such as WhatsApp has expanded beyond broker-dealers to investment funds and advisers, according to four people familiar with the inquiry.
Late last month, the SEC and the Commodity Futures Trading Commission fined 16 financial companies, including large banks such as Goldman Sachs Group Inc. and Morgan Stanley, a combined $1.8 billion after staff discussed deals and trades on their personal devices and apps, in a sweeping probe of record-keeping practices.
That probe primarily targeted broker-dealers rather than asset managers, although funds did become more cautious as a result and joined banks in tightening controls on personal cellphones, as well as text messages and apps such as WhatsApp.
The SEC's enforcement unit has sent inquiries to a number of funds and advisers asking for information about their protocols for so-called “off-channel” business communications, including as recently as last week, the four sources told Reuters. The agency has asked firms to preserve and produce documents and share information on policies related to the use of devices and platforms, the sources said, speaking on condition of anonymity.
The regulatory agency has also asked for details on the firms' organizational charts and past violations and remediation efforts, two of the sources said.
The SEC has been aggressive on enforcement under Democratic leadership and the industry probe into the banks was a landmark case for the SEC and the Commodity Futures Trading Commission, marking one their largest collective resolutions.
