SEC Recordkeeping v. Privacy: Recent Opinion Stirs Debate | Akin

In 2018, an investment professional sued the firm he co-founded for wrongful termination and federal privacy law violations associated with the former employer’s remote accessing into a desktop computer it had purchased for him.

On March 24, 2023, after four-and-a-half years of litigation, a Southern District of New York court substantially eliminated all of the plaintiff’s claims. The one remaining claim, which was brought under the Stored Communications Act, survived because the court expressly rejected the claim of the former employer (a U.S. Securities and Exchange Commission (SEC)-registered investment adviser) that its regulatory recordkeeping obligations trumped a potential federal privacy law violation.

This opinion arrives during a seminal moment for the investment management industry, with several large fund managers facing an SEC Enforcement investigation associated with so-called “off-channel” communications—which is in part grounded in an assertion that registered (and perhaps all) investment advisers have a (perhaps absolute) obligation to capture all “business-related” written and electronic communications.

Source: SEC Recordkeeping v. Privacy: Recent Opinion Stirs Debate | Akin