Most of the companies affected by the investigations on communications and maintenance of records of the Securities Market Commission (SEC) and the United States Raw Material Future Trade Commission (CFTC) have been banks, which together have been Funs or have reserved more than 1,000 million dollars to cover regulatory sanctions.
But fund companies, which manage billions of dollars in assets, are also increasing their scrutiny on how staff and customers interact.
“It is the most hot issue in the sector at this time,” said a business banker, describing the use of personal communication channels in the financial sector in general. The banker refused to be mentioned to comply with the rules of his company to talk to the media.
Reuters reported last year that the SEC was investigating whether Wall Street banks had properly documented the communications of employees related to work, and JPMorgan (JPM was fined with 200 million dollars in December for “generalized” failures.
The German asset manager DWS said last month that he had reserved 12 million euros (12 million dollars) to cover possible US fines related to investigations on the use of devices not approved by their employees and the maintenance requirements of records, joining a series of banks that have taken measures, such as Bank of America, Morgan Stanley and Credit Suisse.
Sources from other investment companies-described in the financial community such as “Buy-Side”-, such as Amundi, Axa Investment Management, BNP Paribas Asset Management and JPMorgan Asset Management, told Reuters who have deployed tools to maintain all communications between the personal and customers in conformity.
The spokesmen of the SEC and the CFTC did not want to comment if their investigations could go beyond the banks, but sources in the sector expect the authorities to extend their networks to the entire financial sector and even the government.
The Office of the Information Commissioner of Great Britain (ICO), the main body protection control agency, requested a review of the use of WhatsApp, private emails and other messaging applications by government officials, After an investigation found an “inadequate data security” during the pandemic.
GOOD BUSINESS FOR SOME
The regulations that regulate financial institutions have been hardly hardening from the global financial crisis of 2007-2009, and companies have long registered staff communications to and from office phones.
This practice is designed to deter and discover infractions such as the use of privileged information and the “front-running”, or the negotiation of information that is not yet public, as well as to guarantee the best practices regarding the treatment of customers.
However, given that thousands of workers in the financial sector and their clientele continue to work at a distance after leaving the company’s offices at the beginning of the pandemic, some delicate conversations that should be recorded have the risk of performing inadvertently through informal channels or Not allowed.
Brad Levy, general director of the Symphony business messaging company, said that the concern for the management of that risk had caused an increase in interest in software updates that make conversations in the most popular messaging tools, such as WhatsApp of Meta Platforms can be recorded.
“Most believe that these investigations will be expanded as deepened,” said Levy.
“Many agents in the market have retention and surveillance requirements, so they are likely to adopt a point of view, including being more proactive even if they are not a direct objective.”
The Symphony user base has far duplicated from the pandemic, to reach 600,000, covering 1,000 financial institutions, including JPMorgan and Goldman Sachs, Levy said.
Movius, a company related to Symphony, also said that its business lines specialized in making WhatsApp communications and other tools they can be recorded have doubled their size in a year, and that sales to asset managers are a growing component.
“Many in the ‘Buy-Soc Highly regulated, including health.
Movius software integrates third -party communication tools, such as email, zoom, Microsoft Teams and WhatsApp, in a system that can be recorded and filed as necessary, he said.
By Iain Withers and Sinead Cruise, from Reuters Agency
Source: Ambito
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