Regulatory bodies in the United States, specifically the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), continue to demonstrate tenacious enforcement when it comes to off-channel communications used by employees of registered entities. Such behavior emphasizes how these bodies prioritize maintaining a strong market environment and ensuring law compliance by financial firms.
The most recent example occurred on Monday, with the settlements announced by both the SEC and CFTC. Although the details of these settlements have not been made public, the announcement itself confirmed the trend, which has been consistent over the past years.
According to a report on JD Supra, the SEC and CFTC are particularly focused on communications that occur outside of approved channels. Such communications could potentially be used to circumvent the checks and balances in place, thereby contributing to market manipulations or fraudulent activities. Actions by the regulators to curtail these behaviors aim to further protect market integrity and the interests of all market participants.
The consistent focus on off-channel communications is a clear message to all registered entities to ensure they have robust policies and procedures in place regarding communication methods and documentation. It is crucial for these firms to understand the importance of maintaining all conversation records within approved channels. Non-compliance runs the risk of enforcement action.
Global professionals working in major corporations and law firms should understand the regulatory landscape and the potential risks associated with improper communication practices. It is clear this will remain a primary focus for both the SEC and CFTC – organizations that show no sign of slowing down their enforcement actions.