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SEC's Expanding WhatsApp Probe: Heightened Risk for Financial Firms

The SEC is broadening the scope of its WhatsApp probes beyond broker dealers to reach the buy-side. This development is a crucial signal for the financial services sector as a whole to re-evaluate their compliance capabilities.


A recent Reuters report reveals that the SEC has intensified its scrutiny of Wall Street's private messaging app usage. Thousands of messages from top Wall Street investment firms and hedge funds are under investigation. Firms like Carlyle Group, KKR & Co, Apollo Global Management, Blackstone, and even Citadel have come under the regulator's radar.


This shift marks a significant departure from the SEC's earlier focus solely on broker-dealers. Now, investment advisers and firms are also in the spotlight. The regulator is requesting access to messages on private devices and applications of selected staff, including senior executives, spanning the first half of 2021.


What does this mean for the industry? It highlights the increasing importance of robust compliance processes and deploying technologies. Companies must ensure they have the capability to capture and store regulated digital data, to meet regulatory demands, especially in the era of digital communication.


Building on the extensive capabilities of Custodia’s CC1 service for regulated data capture, validation and archiving, the CC1 Messaging Service offers an all-in-one service that ensures companies can comply with regulatory requirements without forcing changes to employee communication habits. With CC1’s highly secure selection of tools, businesses can align their regulated data capture needs across text, screen sharing sessions, instant messaging, video, social media, and voice.

What’s more, Custodia ensures businesses can continue using the platforms they already rely on, such as Microsoft Teams and Webex, to interface with popular client applications like WhatsApp and Telegram.


Compliance isn't just about avoiding penalties but also maintaining trust in the financial markets.

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