Can you hear us now? Deciphering regulators’ messaging around financial services companies’ electronic communications compliance

Over US$2bn in fines imposed by the US Securities and Exchange Commission (SEC) alone for record-keeping failures related to the so-called ‘off-channel’ communications have sent shockwaves throughout the industry. What began as a single announced settlement in December 2021 has exploded into an industry-wide sweep that has impacted more than 75 companies ranging from Wall Street’s largest banks to niche broker–dealers. Compliance professionals are looking for answers. They are seeking to strike a difficult balance between enabling employees to communicate effectively using the latest available technologies and ensuring compliance with ageing record-keeping rules. Add a regulatory pressure cooker that has produced a staggering number of eight and nine-figure penalties and it is easy to see why this issue has been dominating headlines and keeping compliance professionals up at night. This paper explores the recent surge in off-channel enforcement and offers some considerations and potential solutions for compliance professionals seeking to meet these challenges head-on. While there are no ‘silver bullets’ or ‘one-size-fits-all’ solutions, there are practical considerations that compliance professionals should consider weighing with respect to the compliance programmes they are charged with overseeing. Specifically, this paper identifies potential solutions as they relate to policies and procedures, training, technology and monitoring and testing. In an area that is inherently specific to each organisation and ever-changing, this paper equips compliance professionals with a toolkit to address one of the most pressing regulatory challenges of our time.