SEC Focus on Communication Compliance


As digital communications technologies see continuous advancements, it has also broadly changed the way employees in organizations worldwide communicate with each other. During the onset of the COVID-19 pandemic, communication tools such as Microsoft Teams, Zoom, and Cisco WebEx were among the top choices of organizations for remote collaboration. Furthermore, using secure instant messaging solutions like WhatsApp, WeChat, and Telegram for work-related communication also grew significantly amid the changing work environment.

This growth in terms of using digital communication technologies in regulated firms has motivated regulatory bodies like the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA)to change existing compliance rules and introduce new policies that cover the requirements for hybrid working models. Regulators expect the registered firms to expand existing efforts to monitor text messages and other business-related communication on digital platforms.

However, some organizations still encounter challenges expanding their monitoring and archiving systems for modern digital technologies such as Verizon text recording. The SEC, the leading USA regulatory body to protect investors in the securities market, has accelerated its enforcement activities to ensure adequate monitoring and archiving systems for business-related communication. 

According to the SEC regulations, financial firms need to comply with broker-dealer record-keeping compliance policies without invading the employees’ privacy. Failure to adhere to the record-keeping regulation subjects offenders to significant monetary and non-monetary penalties. 

Other areas of compliance were also highlighted by the SEC Director of Enforcement Division Gurbir Grewal in an October 2021 speech. It includes the importance of having proactive compliance in the hybrid work environment, the delivery of customer relationship summaries or CRS, and Regulation Best Interest or the Reg BI. In the speech, he also emphasized some key enforcement activities of the SEC to some of the well-known firms to protect the securities market from fraud. 

The SEC also regularly conducts periodic sweeps to gather information about firms suspected of having compliance requirements issues. The sweeps can sometimes become formal regulatory inquiries, but it depends on the information and circumstance.

For more details about SEC focusing on communication compliance, here is an infographic provided by TeleMessage.



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