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SEC Focus on Communication Compliance

For a company to succeed, effective communication is essential. This is especially true since employees must work with real-time context and information. The advancement of digital communication technology has made communication more accessible and more efficient than ever before.

Apart from technological advances, the COVID-19 pandemic prompted companies to use digital communication tools to improve communication between clients and employees. Microsoft Teams, Zoom, and Cisco WebEx are the most popular and widely used tools for remote collaboration.

Instant messaging services such as WhatsApp and Signal have seen a significant increase in use for work-related communications. Employees prefer instant messaging because of its simplicity and convenience.

Some organizations fail to improve their digital technology monitoring and archiving systems. The SEC Director of Enforcement Division’s recent speech and subsequent sweep shows that the SEC is still focused solely on communication compliance.

Generally, company servers do not capture communications between employees and their personal apps. Companies may not be able to find relevant documents sent to employees’ personal apps when they conduct an internal investigation, respond to a lawsuit document request, or answer a regulatory investigation.

This is the reason why the SEC is now primarily focused on compliance with communication rules and has imposed strict compliance rules. They also take compliance violations very seriously. SEC has also increased enforcement by ensuring that businesses have the proper monitoring and instant messaging archiving systems for business-related communications.   

If a company must keep records for regulatory purposes or monitor business communications to ensure compliance, regulatory, or cybersecurity, the monitoring process cannot review personal communications.

To avoid non-compliance penalties and fines, financial firms and broker-dealers must adhere to WhatsApp FINRA regulations. This regulation to record mobile messages via the app is not simple to follow, especially if there is no compatible WhatsApp recording solution.

For more information about the focus of the SEC in terms of communication compliance, see this infographic from TeleMessage.


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