Saturday, Jun 22, 2024

SEC Focus on Communication Compliance

As the main USA regulatory body that protects investors of the securities market, the SEC has accelerated its current enforcement activities to ensure adequate monitoring systems to archive text messages and calls related to business communications.

According to SEC regulations, financial firms and organizations must comply with broker-dealer record-keeping compliance for instant message capture without compromising the employees’ privacy. Complying with these record-keeping rules leads to substantial monetary and non-monetary penalties.

The SEC Director of Enforcement, Gurbir Grewal, highlighted many compliance areas, including the significance of proactive compliance in work environments, customer-relationship summaries or CRS, and Regulation Best Interest or the Reg BI in a speech in October 2021. In the initial parts of his speech, Grewal also emphasized some of the vital enforcement initiatives of the SEC against prominent financial firms that show their best efforts to protect the securities market from fraud.

Soon after Grewal’s speech, the SEC initiated an inquiry to determine how Wall Street Banks monitor and capture employees’ digital communications. Multiple banks went through the scrutiny of checking if they were adequately recording work-related communications such as emails and text messages.

The SEC also conducts periodic sweeps to collect information about firms and organizations it suspects to have issues in compliance. Sometimes, the sweeps can become formal regulatory inquiries depending on the information and the situation.

SEC’s focus on communication compliance prioritizes security, safety, and compliance in digital communications technologies in the current workplace landscape. As applications emerge for communication and collaboration, become imperative for businesses, policies and guidelines must be updated to lessen compliance risks in the long term.

Organizations must have a robust monitoring and archiving solution that helps handle and record business-related communications. These solutions must be introduced when technologies evolve, and new digital channels emerge. It also implies that regulated firms and organizations must take a proactive approach to compliance that can help them be prepared for sweeps and regulation changes.