In a memo to federal prosecutors in September, Deputy Attorney General Lisa Monaco directed Department of Justice prosecutors to consider companies’ policies and practices both when evaluating the effectiveness of corporate compliance programs in connection with potential criminal charges and when considering imposing ongoing obligations as part of corporate criminal resolutions. Moreover, the SEC and CFTC are not alone in increasing their focus on the use of personal devices and third-party messaging platforms. Such increased scrutiny will surely be accompanied by an increase in enforcement referrals and actions. Indeed, the SEC Examinations Division’s August 2022 review of its examination of over 450 advisers to municipal entities clearly showed that examination staff will consider the use of personal devices and personal messaging platforms to conduct business. Registered investment advisers and broker-dealers of all sizes should anticipate continued SEC and CFTC focus on the use of personal and ephemeral messaging platforms, not just from agency enforcement staff but also agency examination staff. These enforcement actions follow similar agency settlements with other large Wall Street entities earlier this year. The firms collectively agreed to pay approximately $1.8 billion in civil penalties to resolve agency allegations that they had allowed their traders and other personnel to conduct business using third-party messaging platforms on their mobile devices. On September 27, the Securities and Exchange Commission and Commodity Futures Trading Commission separately announced charges against an array of Wall Street firms for failing to preserve electronic communications as required by federal law.
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