FINRA and the SEC have been increasing their enforcement against firms in highly regulated industries' use of communicating sensitive information on platforms like iMessage and WhatsApp. Yet recent news from the SEC sheds light on a new approach that condones honesty: financial firms that report recordkeeping rule breaches directly to the SEC may see a hefty reduction in fines.
Since December 2021, the SEC has been cracking down massively on businesses' use of unregulated messaging apps for businesses, to the tune of $1.7 billion in fines. This uptick in hand-slaps has raised eyebrows for some, even claiming that the SEC is picking businesses at random to fine. But despite these concerns, the SEC is adamant about their commitment to assessing each firm individually and doling out fines appropriate to the violation.
This new approach from the SEC stems from an effort to encourage increased compliance, leading to fewer enforcement actions as well as higher penalties for repeat offenders and, ultimately, a more ethical business landscape for clients and customers alike.
If a firm isn’t already archiving and capturing their communications using a platform like FirmScribe to capture iMessage in order to avoid any fines, their next best option is to self-report when they notice a breach in security to significantly lower their penalty. That, coupled with cooperation in an investigation, matters most when it comes to paying less.
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