Recordkeeping failures in eComms costing large companies over $1.1bn


A sweep by the Securities and Exchange Commission (SEC) has found several companies are failing to capture certain business communications.

In September 2021, the SEC began the sweep focused on how companies were monitoring, archiving and safeguarding employee communications, including whether firms were adequately supervising the use of personal devices.

According to ACA Group, the SEC uncovered widespread use of unapproved devices and private messaging apps by employees. This occurred even though the businesses had established policies and procedures that addresses such communications.

ACA said, “Although the financial industry has been quick to adopt new ways to communicate with clients and colleagues, firms have been slow to adopt technology that can capture, retain, and assist with monitoring electronic communications (“eComms”) sent or received via messaging apps like WhatsApp and WeChat.

“That is a problem because SEC regulations require firms to archive certain business communications of their employees. To avoid potential record retention issues, many firms prohibit the use of unarchived eComms channels for business purposes. However, enforcing these policies has been an ever-growing challenge for firms and their compliance teams.”

Most recently, the SEC fined 16 firms for failure to capture certain business communications, as well as failure to supervise their employees by not detecting or preventing the use of unapproved devices. These firms paid fines and penalties in excess of $1.1 billion.

SEC recently said it would require Oracle to pay $23m in fines due to foreign corruption charges.

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