SEC Enforcement Actions On Text Messages Require Changes To Practices

The SEC routinely pursues enforcement actions against financial institutions for failing to retain text messages and other electronic communications in accordance with its recordkeeping requirements, including several high-profile cases this past fall. These enforcement actions typically involve fines and other penalties, as well as orders requiring firms to implement corrective measures to ensure compliance in the future.

Recently the SEC announced charges against several financial firms for widespread and longstanding failures to maintain and preserve written communications, resulting in over $1 billion in penalties and requiring improvements to compliance policies and procedures to settle these matters. The SEC found that employees at the firms routinely communicated about business matters using text messaging applications on their personal devices, and the firms did not maintain or preserve the majority of these off-channel communications, in violation of