One recent enforcement trend has been especially impactful to the bottom line, resulting in the SEC and the Commodity Futures Trading Commission (CFTC) penalizing registered entities more than $2 billion in less than two years for a common practice. What is this deeply troubling behavior? Securities or commodities fraud? Try again. Deceptive practices that harm customers or their investments? Nope. Still stumped? Individual employees of registered broker-dealers and investment advisers had been using WhatsApp, text messages and iMessages, and personal email such as Gmail to send business-related messages.
Levity aside, regulators are as serious as a heart attack about rules requiring brokers and advisers to preserve business-related messages. In this post, I’ll take stock of the recent enforcement actions in this space, offer some thoughts for industry participants, and note where insurance can be helpful. I’ll also discuss broader implications that these cases may have for public companies outside of the financial services industry. If you are reading this on your phone, please finish the article before sending your next self-destructing message.
‘Enforcement 40’ for 2020
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