As published on: proactiveinvestors.co.uk, Wednesday 27 November, 2023.
The Securities and Exchange Commission (SEC) has escalated its investigation into Wall Street's use of private messaging applications, collecting thousands of staff messages from over a dozen major investment companies.
As per Reuters, the SEC's heightened scrutiny is aimed at assessing potential breaches of record-keeping rules and ensuring compliance within the financial sector.
Initially focusing on broker-dealers, the two-year crackdown targeted the use of unofficial messaging apps such as WhatsApp and Signal for work-related discussions. This initiative resulted in regulators imposing fines exceeding US$2 billion.
The recent phase of the investigation has expanded to encompass more than a dozen investment advisers. The SEC has specifically sought messages sent on personal devices or applications during the first half of 2021 that pertain to business matters, sources confirm. The investigation involves identifying select employees, including senior executives, and collecting relevant messages for review.
Among the firms under scrutiny are prominent names in the financial industry, including Carlyle Group, Apollo Global Management (NYSE:APO), KKR & Co., TPG, Blackstone, and some hedge funds like Citadel.
The messages discussing business matters have willingly been shared with the SEC, according to Reuters
The SEC commenced its engagement with investment advisers in October 2022, initially seeking details on their record-keeping policies akin to the broker-dealer inquiries. However, investment advisers resisted, contending that their record-keeping requirements were narrower compared to broker-dealers.
Subsequently, the SEC insisted on the handover of messages from these advisers, highlighting the agency's determination to uphold regulatory standards and transparency within the financial sector.