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Can you hear us now? Deciphering regulators’ messaging around financial services companies’ electronic communications compliance
Journal of Financial Compliance,
8
(3),
215-232
(2025)
Abstract
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.
Keywords: off-channel; communications; enforcement; SEC; text message; sweep; texting; text
The full article is available to subscribers to the journal.
Author's Biography
Amy Jane Longo is a partner in Ropes & Gray’s litigation and enforcement practise group, where she focuses on US Securities and Exchange Commission (SEC) enforcement matters and the defence of securities and other class action cases. Amy has more than 25 years’ experience in securities litigation, with significant first-chair experience both as a defence counsel and as a senior SEC trial attorney. Amy has extensive experience in the financial services, technology and healthcare/life sciences industries, both in the public and the private sector, as well as in the defence of ERISA cases and other complex business disputes. Amy previously served as the Regional Trial Counsel for the SEC’s Los Angeles Regional Office in the Division of Enforcement.
Daniel O’Connor Dan O’Connor co-leads the Securities & Futures Enforcement practise at Ropes & Gray. A former US Securities and Exchange Commission (SEC) trial attorney, Dan works with public companies and investment advisers, as well as senior individuals at these companies, involved in civil and criminal government enforcement matters before the SEC, US Department of Justice (DOJ) and other state and foreign regulators. Dan has particular expertise in assisting management and directors in running internal investigations, addressing sensitive governance issues and establishing and evaluating regulatory compliance programmes. Dan previously served as a Senior Trial Counsel at the SEC where he handled prosecutions and investigations of corporate entities and individuals for civil and criminal violations of federal securities laws, including various accounting and reporting fraud schemes, fraud by hedge funds and other investment advisers, Foreign Corrupt Practices Act (FCPA) issues, market manipulation and broker–dealer fraud and failure to supervise.
Shannon Capone Kirk is a 25-year litigation and eDiscovery veteran, and the Managing Principal and Global Head of Advanced E-Discovery and A.I. Strategy at Ropes & Gray. Shannon counsels global corporations in large-scale litigation and investigations, with deep experience strategising on litigation readiness programmes and protocols to collect and review data domestically and in foreign countries, and on the most efficient, practical and cost-effective document preservation, collection and review plan for any given matter. She has mastered the application of machine learning (ML) in document review and is ideally positioned to help clients navigate this and many other aspects of eDiscovery critical to litigation and investigations.
Cole A. Goodman Cole Goodman is an Associate in the litigation and enforcement group, representing asset management clients across a broad range of practise areas, including complex civil litigation, government enforcement actions, regulatory inquiries such as US Securities and Exchange Commission (SEC) and Financial Authority Regulatory Authority (FINRA) examinations and internal investigations. His clients include mutual fund advisers, hedge funds, private equity funds, venture capital funds, publicly traded companies and multinational banks.
Jake Barr is an Associate in the data, privacy and cybersecurity practise group.
