In a ruling that could send shockwaves through the financial sector, several major financial institutions and their affiliates were recently hit with fines totaling $549 million. This decision was handed down by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), and related to the parties’ failure to uphold proper protocol with regard to the record-keeping of electronic communications on employees’ personal devices. Read the full summary of these fines on JDSupra.
The penalties were levied against a numerous companies, including ones functioning as broker-dealers, swap dealers, and futures commission merchants. The case brings into sharp focus the ongoing debate regarding the use of personal devices for official communication in the financial and legal sectors; and underscores the critical need for stringent compliance in record-keeping obligations, particularly when it comes to digital communication.
This enforcement is indicative of the concerted efforts by regulatory bodies like the SEC and CFTC to uphold compliance norms and ensure that institutions do not bypass critical regulation around record preservation. It also underscores the legal liabilities businesses may face should they fail to meet those norms.
In light of this judgment, establishment of robust, compliant, and enforceable electronic communication policies – particularly those governing communication on personal devices – must be high on the agenda for executives in these organizations. Further, there is an immediate need for these organizations to audit their current practices and policies, and where necessary, enact significant changes to meet regulatory expectations.
This scenario further underlines the necessity for modern corporations, irrespective of their fields, to keep a vigilant eye on regulatory landscapes, and the imperative need to ensure consistent compliance with both domestic and international regulations. Legal professionals, across corporations and firms, should take this scenario as a clear indicative of awakening towards increasing legal implications of their communication policies.