{"id":6386,"date":"2024-01-18T12:17:02","date_gmt":"2024-01-18T17:17:02","guid":{"rendered":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/?p=6386"},"modified":"2024-01-18T12:17:23","modified_gmt":"2024-01-18T17:17:23","slug":"how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging","status":"publish","type":"post","link":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/","title":{"rendered":"How the SEC Keeps Raising the Stakes on Ephemeral Messaging"},"content":{"rendered":"

\"\"<\/p>\n

Solutions Review\u2019s Contributed Content Series<\/u><\/a> is a collection of contributed articles written by thought leaders in enterprise tech<\/a>. In this feature, MirrorWeb<\/a>‘s COO Harriet Christie offers commentary on how the SEC keeps raising the stakes on ephemeral messaging.<\/strong><\/i><\/span><\/p>\n

\"\"<\/a><\/span>When JP Morgan Chase was fined $200 million for recordkeeping failures in 2021, it felt monumental. While \u2018ephemeral messaging\u2019 penalties were admittedly a new proposition, the size of the levy should have drawn a line in the sand and led to a tectonic shift in compliance procedures for financial services organizations. What has unfolded since has been cautionary, captivating, and indeed costly for many firms caught off guard by the regulator\u2019s strict enforcement.<\/p>\n

This article provides a timeline of the SEC\u2019s investigation so far, including the measures taken, who is affected, how the stakes continue to escalate, and how firms can keep themselves out of the firing line. But before that, it\u2019s important to establish why the probe is happening in the first place, and how such a fundamental oversight caught the entire sector cold.<\/p>\n

Why is Text Messaging in the Firing Line?<\/strong><\/h4>\n

The SEC mandates<\/a> that financial firms maintain records of all communication between clients and brokers and routinely conduct investigations to ensure compliance.<\/p>\n

Exchanges like those occurring through WhatsApp and other \u2018off channel\u2019 mobile platforms are far more difficult to monitor and capture than email, for example, and so have not traditionally featured in organizations\u2019 record-keeping strategies. Interacting with clients on these platforms is non-compliant in such cases, leading to most firms deeming it best practice to ban their use entirely.<\/p>\n

This was jeopardized by the disruption of the COVID-19 pandemic, which led to far greater reliance on messaging apps, and more workers using personal phones or tablets for business. <\/strong>Since the shift to hybrid working, organizations have struggled to impose restrictions on staff that rely on the prevalence and convenience of these platforms. As a result, the scope for regulatory infraction has grown.<\/p>\n

Establishing a Culture of Compliance<\/strong><\/h4>\n

Since July 26th<\/sup> 2021, Gurbir Grewal has been acting as the SEC\u2019s enforcement director. He recently revealed that his ambition in the role was to enhance public trust in institutions and that he wished to \u2018impose penalties that would have a lasting impact across the industry.\u2019 Grewal inherited a role in which the issue of keeping tabs on staff communications \u2018had dogged Wall Street compliance departments for years<\/a>.\u2019<\/p>\n

The SEC began to take action in December 2021, when JPMorgan Chase failed to provide documents from 2018 pertaining to an unrelated probe. This eventually led to the bank admitting the charges over record-keeping lapses and accepting a settlement<\/a> with the SEC for $125 million \u2013 an unprecedented punishment for a crime that had thus far evaded the regulator\u2019s attention.<\/p>\n

Continued Escalation<\/strong><\/h4>\n

While some firms did take heed of JP Morgan\u2019s public sanction and revise their compliance policies and procedures, it wasn\u2019t enough to convince regulators that things had moved sufficiently in the right direction.<\/p>\n

By September 2022, the SEC had fined another 16 leading financial firms<\/a> (including Barclays, Goldman Sachs and Morgan Stanley) a combined $1.1 billion, as the situation escalated dramatically in \u2018a landscape case for the agency\u2019.<\/p>\n

“Since the 1930s, such recordkeeping has been vital to preserve market integrity. As technology changes, it’s even more important that registrants appropriately conduct their communications about business matters within only approved channels, and they must maintain and preserve those communications,” said SEC Chairman Gary Gensler.<\/p>\n

The SEC subsequently expanded its probe, with investment funds\/advisors<\/a> finding themselves in the spotlight that October, while major hedge funds<\/a> (including Point72 and Citadel) were requested to review employee handsets in February 2023.<\/p>\n

A few months passed before another round of large penalties landed<\/a> in August, as the probe continued to haunt financial services firms. Nine Wall Street broker-dealers, including Wells Fargo and BNP Paribas, agreed to pay penalties totaling $549 million to the SEC and CTFC.<\/p>\n

As SEC deputy enforcement director Sanjay Wadha, explained in the aftermath, \u2018\u201cWe know that other SEC-regulated entities have committed similar violations, and so our work to enforce industry-wide compliance continues.” This statement, and the consistency it justifies are not surprising. The aforementioned Gurbir Grewal occupies the role senior to Mr Wadha, and views books and records obligations as vital to market integrity<\/a>. It’s clear that this mindset is ingrained throughout the division.<\/p>\n

Raising the Bar<\/strong><\/h4>\n

The escalation of this probe doesn’t just constitute additional companies being examined; the investigation process has also become more severe, with numerous sources reporting that the agency has now confiscated thousands of phones<\/a>. Previously, businesses were asked to review employee handsets themselves. The new approach leaves them more open, with nowhere to hide and no control over how their findings are reported back.<\/p>\n

The next round of fines<\/a> landed in September as broker-dealers and investment advisers, including Interactive Brokers and William Blair & Co, received multi-million dollar levies for similar record-keeping violations.<\/p>\n

The SEC\u2019s Gurbir Grewal shared an interesting revelation in the aftermath, spelling out the perks of cooperation to firms that may feel vulnerable. \u201cOne of the orders included in today\u2019s announced actions is not like the others. There are real benefits to self-reporting, remediating and cooperating.\u201d This refers to Perella Weinberg Partners, who self-reported their failures, and whose penalty of $2.5 million was the smallest by quite a distance. The next smallest was Fifth Third Securities Inc with an $8 million penalty.<\/p>\n

What\u2019s Next?<\/strong><\/h4>\n

Almost two years have passed since the SEC fired its first shot in the \u2018WhatsApp fines\u2019 probe, making an example of JP Morgan just in time for Christmas. After a subsequent pause, the investigation exploded back into life in September 2022, and has since shown no sign of slowing down. There have been several significant moments in the investigation where the agency may have relented, but they continue to double down, exacting their standards across the board.<\/p>\n

It’s natural to wonder what the endgame might look like in this saga. The SEC posted record enforcement penalty figures<\/a> last year, and so their approach has clearly been lucrative. As Gurbir Grewal has repeatedly asserted, for the sake of integrity, these laws must be applied across the entire industry, regardless of a company\u2019s size or the potential scale of wrongdoing.<\/p>\n

Firms can\u2019t escape this scenario by retrospectively gathering messages that have already been overlooked. By prolonging their investigation and regularly drip-feeding details of new firms (of all shapes and sizes) that are being held to account, the SEC has made it abundantly clear that mobile communications capture is now an inescapable requirement. With the incentivization of self-reporting and remediation, they have also shown that proactivity will be rewarded and that no good will come from firm\u2019s sitting on their hands or, even worse, pleading ignorance.<\/p>\n","protected":false},"excerpt":{"rendered":"

Solutions Review\u2019s Contributed Content Series is a collection of contributed articles written by thought leaders in enterprise tech. In this feature, MirrorWeb‘s COO Harriet Christie offers commentary on how the SEC keeps raising the stakes on ephemeral messaging. When JP Morgan Chase was fined $200 million for recordkeeping failures in 2021, it felt monumental. While […]<\/p>\n","protected":false},"author":189,"featured_media":6391,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[1313,1314],"acf":[],"yoast_head":"\nHow the SEC Keeps Raising the Stakes on Ephemeral Messaging<\/title>\n<meta name=\"description\" content=\"In this feature, MirrorWeb's COO Harriet Christie offers commentary on how the SEC keeps raising the stakes on ephemeral messaging.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Harriet Christie\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/\",\"url\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/\",\"name\":\"How the SEC Keeps Raising the Stakes on Ephemeral Messaging\",\"isPartOf\":{\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Enterprise-Cloud-Strategy-1.jpg\",\"datePublished\":\"2024-01-18T17:17:02+00:00\",\"dateModified\":\"2024-01-18T17:17:23+00:00\",\"author\":{\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#\/schema\/person\/8a58ac49c00b97bde5a52e29af7edd3f\"},\"description\":\"In this feature, MirrorWeb's COO Harriet Christie offers commentary on how the SEC keeps raising the stakes on ephemeral messaging.\",\"breadcrumb\":{\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#primaryimage\",\"url\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Enterprise-Cloud-Strategy-1.jpg\",\"contentUrl\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Enterprise-Cloud-Strategy-1.jpg\",\"width\":800,\"height\":400},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"How the SEC Keeps Raising the Stakes on Ephemeral Messaging\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#website\",\"url\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/\",\"name\":\"Best Backup and Disaster Recovery Tools, Software, Solutions & Vendors\",\"description\":\"Solutions Review\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#\/schema\/person\/8a58ac49c00b97bde5a52e29af7edd3f\",\"name\":\"Harriet Christie\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Harriet-Christie.jpg\",\"contentUrl\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Harriet-Christie.jpg\",\"caption\":\"Harriet Christie\"},\"description\":\"Harriet was appointed Chief Operating Officer in 2020. Since then, she has helped oversee the evolution of the MirrorWeb product and service offering, as well as the business' impressive growth since her taking on the role. Harriet graduated from the University of Sheffield in 2010, with a BA in Management Accounting, Entrepreneurship, Business Law, BSR, HR.\",\"url\":\"https:\/\/solutionsreview.com\/backup-disaster-recovery\/author\/hchristie\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"How the SEC Keeps Raising the Stakes on Ephemeral Messaging","description":"In this feature, MirrorWeb's COO Harriet Christie offers commentary on how the SEC keeps raising the stakes on ephemeral messaging.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/","twitter_misc":{"Written by":"Harriet Christie","Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/","url":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/","name":"How the SEC Keeps Raising the Stakes on Ephemeral Messaging","isPartOf":{"@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#website"},"primaryImageOfPage":{"@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#primaryimage"},"image":{"@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#primaryimage"},"thumbnailUrl":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Enterprise-Cloud-Strategy-1.jpg","datePublished":"2024-01-18T17:17:02+00:00","dateModified":"2024-01-18T17:17:23+00:00","author":{"@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#\/schema\/person\/8a58ac49c00b97bde5a52e29af7edd3f"},"description":"In this feature, MirrorWeb's COO Harriet Christie offers commentary on how the SEC keeps raising the stakes on ephemeral messaging.","breadcrumb":{"@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#primaryimage","url":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Enterprise-Cloud-Strategy-1.jpg","contentUrl":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Enterprise-Cloud-Strategy-1.jpg","width":800,"height":400},{"@type":"BreadcrumbList","@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/how-the-sec-keeps-raising-the-stakes-on-ephemeral-messaging\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/"},{"@type":"ListItem","position":2,"name":"How the SEC Keeps Raising the Stakes on Ephemeral Messaging"}]},{"@type":"WebSite","@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#website","url":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/","name":"Best Backup and Disaster Recovery Tools, Software, Solutions & Vendors","description":"Solutions Review","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#\/schema\/person\/8a58ac49c00b97bde5a52e29af7edd3f","name":"Harriet Christie","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/#\/schema\/person\/image\/","url":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Harriet-Christie.jpg","contentUrl":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/files\/2024\/01\/Harriet-Christie.jpg","caption":"Harriet Christie"},"description":"Harriet was appointed Chief Operating Officer in 2020. Since then, she has helped oversee the evolution of the MirrorWeb product and service offering, as well as the business' impressive growth since her taking on the role. Harriet graduated from the University of Sheffield in 2010, with a BA in Management Accounting, Entrepreneurship, Business Law, BSR, HR.","url":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/author\/hchristie\/"}]}},"_links":{"self":[{"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/posts\/6386"}],"collection":[{"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/users\/189"}],"replies":[{"embeddable":true,"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/comments?post=6386"}],"version-history":[{"count":0,"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/posts\/6386\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/media\/6391"}],"wp:attachment":[{"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/media?parent=6386"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/categories?post=6386"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/solutionsreview.com\/backup-disaster-recovery\/wp-json\/wp\/v2\/tags?post=6386"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}