U.S. Capital Markets Regulators Crack Down On Recordkeeping And Unapproved Communication Methods

The pervasiveness of alternative modes of recorded communication has raised challenges for firms to meet their obligations to preserve and maintain employee communications as business records. Use of applications such as WhatsApp, Slack, Signal, Zoom, Microsoft Teams, SMS and Webex has become commonplace in the broker-dealer and trader communities, particularly since the onset of the COVID-19 pandemic. Use of communications applications like these has recently been front and centre in regulatory enforcement proceedings in the United States, and Canadian capital markets regulators have likely identified similar issues.

Last fall, the Securities and Exchange Commission (the SEC) voted to adopt certain electronic recordkeeping rule amendments designed to modernize recordkeeping requirements in light of technological changes over the past two decades.¹ This vote came shortly after several enforcement proceedings that resulted in notable penalties for recordkeeping