Text Messages Lead To $4.47B Liability In Securities Fraud Class Action

Text messages and other non-email, electronic communications have become increasingly important in securities fraud matters. These communications are often sent from personal mobile devices and often provide key evidence. It has become clear that the most interesting, and sometimes most problematic, communications often do not take place via email.

Messages sent via text and other messaging applications are increasingly being relied upon as evidence in securities fraud investigations and litigations. Since 2021, the SEC has investigated large trading firms for "off-channel communications," business-related communications through platforms that are not monitored or firm-approved (e.g., text messages). As a result, the SEC has fined financial firms a total of over $1.7 billion for failure to maintain and preserve electronic communications.¹