“A lot of times when there is a compliance failure, folks narrow in on the very specific thing in front of them instead of thinking more broadly about what the more systemic issue might be.”
— Veronica Martinez, Law Professor Specializing in Professional and Organizational Ethics, Duke University
This week, we explore several key lessons learned from Commodity Futures Trading Commission (CFTC) orders and Securities and Exchange Commission (SEC) enforcement on recordkeeping and supervision violations. In addition, we learn about how the SEC is expanding WhatsApp scrutiny to money manager communications following the recent enforcement action against several banks for violations. Finally, we consider how to appropriately police smartphone business use and the risks of failing to do so.
FERC Compliance: Lessons Learned from CFTC Orders on Recordkeeping and Supervision Violations
The CFTC recently issued orders, filing and settling charges against various affiliates of financial institutions for failing to maintain, preserve, or produce records that were required to be kept under the CFTC’s recordkeeping requirements and failing to diligently supervise matters related to their businesses. FERC also has record retention requirements, which enable it to monitor and enforce its rules and regulations and enhance market transparency. Failure to maintain compliance with recordkeeping requirements may create exposure for a company on several fronts, depending on the scope of its business activities. Learn several essential FERC compliance-related takeaways from the CFTC orders.
Compliance Tips: Broker-Dealer and Adviser Use of Personal Devices
With the recent SEC enforcement action against 15 broker-dealers and investment advisor for violations of recordkeeping rules, broker-dealers and investment advisers that have not already undertaken a review of their personal use and off-channel communication policies should do so now before 2022 draws to a close. From policies and procedures to surveillance to training, learn five takeaways from recent enforcement activity. Every firm should take the time to ensure that its compliance with applicable recordkeeping rules is ready for inspection.
SEC Expands WhatsApp Scrutiny to Money Manager Communications
The US Securities and Exchange Commission is looking into whether asset managers used WhatsApp and other outside messaging apps to conduct official business, ratcheting up its probe into Wall Street’s record-keeping practices. The regulator has recently sent letters to investment firms requesting information on their employees’ communications practices. The SEC’s previous investigations into similar brokerage issues put the financial services industry on notice of the agency’s stringent record-keeping expectations.
