On both the technological and regulatory levels, firms continue to struggle to successfully address the evolving issues in compliant message archiving.
The SEC and other regulators have lately stepped up compliance enforcement of business communications on messaging platforms. Based on recent SEC enforcement activity it appears inclined to pursue actions against firms for failing to properly monitor and retain employees’ business communications. Of most significance this month, Morgan Stanley says it is responding to ‘Requests For Information From Regulators Concerning Its Compliance With Record-Keeping Requirements’. The request is related to business communications on unapproved messaging platforms, the bank said in a regulatory filing.
SEC and FINRA Expecting Proactivity
In an October speech by Gurbir S Grewal, SEC Director, Division of Enforcement, he noted that companies “need to be actively thinking about and addressing the many compliance issues raised by the increased use of personal devices, new communications channels, and other technological developments like ephemeral apps.”
Furthermore, Grewal recommended, “[a] proactive compliance approach requires market participants to not wait for an enforcement action to put in place appropriate policies and procedures to preserve these communications.” And that “[r]ecordkeeping requirements are core to the Commission’s enforcement and examination programs and when firms fail to comply with them … they directly undermine our ability to protect investors and preserve market integrity.”
Soon thereafter, the SEC initiated an industry-wide sweep targeting Wall Street banks and their procedures for tracking and retaining employees’ business-related electronic communications, making it clear that the SEC is stepping up enforcement and that record-keeping obligations are a priority. The December 17th JP Morgan $200 million fine—centered around using employees’ personal devices, from which WhatsApp messages, text messages, and emails were sent for business purposes—was practically unprecedented, with the last major SEC penalty for such conduct of $15 million assessed against (ironically) Morgan Stanley in 2006.
As noted in the US Financial Industry Regulatory Authority’s (FINRA) advertising regulation FAQ section, “Whether a communication should be retained does not depend on the device or platform used but rather on the content (i.e., does it pertain to a broker-dealers’ “business as such” under Rule 17a-4) and context. And under FINRA Rule 3110(b)(4), financial institutions must review internal communications and flag those that require review under FINRA regulations, through whatever platform that may be.
Mobile Content Proliferation Proving Unmanageable
This compliance challenge is compounded with the explosion in usage of dynamic collaboration toolsets and the ever-expanding volume and proliferation of attachments and content, with regulation largely retrofitted from a simpler email era. This gap with 20th century mindsets and toolsets is highlighted in the handling of currently challenging realities:
Retaining the full context and history of mobile communication
Effective compliance monitoring, supervision and security risk evaluation (for matters such as collusion and misconduct) requires the ability to reconstruct dynamic and disjoint conversations involving multiple participants whose conversation content is multi-layered. For example, companies must fully capture text, voice, images, links and more—all of which can significantly affect conversation interpretation—to be able to fully recreate the chat flow.
Evolving updates of regulatory coverage for new modes of communication
Firms must be pro-active in anticipation of governing monitoring developments. For example, for the European Securities and Markets Authority’s (ESMA), electronic communications “includes among others video conferencing, fax, email, Bloomberg mail, SMS, business-to-business devices, chat, instant messaging and mobile device applications,” adding, that it “will not produce an exhaustive list of electronic communications because of the continuing innovation and advancement in technology which would mean the list frequently becomes out-of-date.”
Similarly, FINRA requires the supervision of “visual aids, such as a whiteboard or dynamic charts, or a chat or instant messaging feature during a live, unscripted online conference,” and that, “the use of these visual aids may be correspondence, retail communications or institutional communications, and the firm must supervise them as such.”
Legacy challenge in the archival and retrieval of all work messages
The email mindset remains embedded in much of the outmoded compliance mindset. The modern multi/hyper communication links and attachments routinely embedded in contemporary exchanges among employees and stakeholders refutes any notion that an insufficiently robust archiving mechanism can adequately address today’s (and tomorrow’s) compliance requirements.
Despite these challenges and increased enforcement, ResearchandMarkets reports that only some 20% of organizations overall have defined and implemented policies for mobile computing, with laggards predominant among small- to medium-sized firms, as the number of those with policies rises to 50% among large firms. This IT challenge arises in the context of remote access being available to only one third of mobile workers and instant messaging available to only one quarter.
About TeleMessage
TeleMessage offers employees the freedom to use modern messaging applications on the mobile and desktop. Our mobile archiving products securely record content from mobile carriers and mobile devices, letting companies meet recordkeeping regulations and compliance requirements.
With multiple archiving solutions, you can always find the right tools or blend for your requirements:
- Network Archiver
- Enterprise Number Archiver
- Android Archiver
- WhatsApp Archiver
- WeChat Archiver
- Signal Archiver
- Telegram Archiver
TeleMessage offers cross-carrier and international mobile text & calls capture and archiving for corporate and BYOD phones. Visit our website at www.telemessage.com to learn more about our mobile archiving products.
