ADVISORS AND WHOLESALERS COMMUNICATING VIA TEXT? READ THIS!
Reuters recently published an article outlining how a variety of regulators throughout the EU and U.S. have been cracking down on firms using WhatsApp or other messaging tools. Firms have increasingly permitted employees to communicate using third-party media because they are believed to be quicker, more direct and preferred by counterparts. However, the regulatory concern is that there is often inadequate data security to protect financial industry information, and therefore infringements such as insider trading, front running or trading on material non-public information may occur. Member firms that allow communications outside of their servers are reminded and encouraged to cast their surveillance net broad and deep enough to monitor any permitted electronic communication media, and to have policies and procedures to govern usage, even if it is to explicitly prohibit it.