SEC Charges for Off-Channel Communications | Donna DiMaria Insights
VIGILANT INSIGHTS
Introduction
The industry received a big reminder this month that the SEC continues to target off-channel communications by Firms, with Twenty-Six (26) Firms receiving a total of $392 million in fines.
This should not come as a surprise to anyone, considering the on-going enforcements by the SEC the past few years in this area.
Vigilant Director, Donna DiMaria, MBA, was quoted in a CQ Roll Call article discussing the implications of the charges.
Donna DiMaria Insights
Firms will continue to be charged if the SEC finds recordkeeping practices insufficient.
Donna notes that this recent action indicates that simple archiving of normal business channels, such as email, is insufficient with today’s technology. She recognizes that there may inevitably be a de facto requirement for Firms to monitor personal devices but understands the privacy concerns that will be raised.
Employees will rightfully have concerns about their personal devices being monitored, but the question arises of how else a Firm can realistically protect itself from employees engaging in off-channel communications.
It is important that Firms find solutions fast, however, because Donna notes that the SEC clearly shows no intention of relenting.
Vigilant’s Conclusion
It would be prudent for Firms to tighten their recordkeeping practices and be sure that their policies and procedures are both reasonably designed and implemented.
Vigilant provides an initial Gap Analysis amongst a host of end-to-end Compliance Solutions that can help your Firm reduce its regulatory risk.
As the SEC continues to look for insufficient recordkeeping, compliance programs that lack the experience, resources, and personnel will continue to struggle.
Reach out to us today with any questions or concerns you may have.