The Securities and Exchange Commission (SEC) continues to crack down on the use of private messaging apps, such as WhatsApp and Signal, by Wall Street firms for official discussions. The regulator is close to making settlements with nearly two dozen investment advisers and broker-dealers, including Carlyle Group (CG), Apollo Global Management (APO), KKR & Co. (KKR), TPG, and Blackstone (BX).
The two-year-long probe was initially restricted to broker-dealers. The regulator asked firms to undergo internal reviews of messages to identify potential violations of record-keeping laws. Following this, the SEC reviewed some of those messages and imposed penalties totaling over $2 billion on the companies.
In the meantime, lapses in record-keeping by investment companies grabbed the SEC’s attention. Thus, the regulator expanded the probe after collecting thousands of staff messages from the companies. The SEC targeted specific employees, including senior executives, with some cases involving over 12 individuals.
Last month, the SEC imposed fines on major banks, including Wells Fargo (WFC), Morgan Stanley (MS), Bank of America (BAC), Citigroup (C), J.P. Morgan (JPM), and Goldman Sachs (GS).
While the fines imposed by the SEC are small in amount, they point to the growing scrutiny of regulators in financial institutions. Director of the SEC’s Division of Enforcement, Gurbir S. Grewal, said, “Compliance with the books and records requirements of the federal securities laws is essential to investor protection and well-functioning markets.”
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