Conclusion
In November 2022, commenting on the SEC’s enforcement action for off-channel communications, SEC Chair Gary Gensler said that “market participants did not act as if they got the message”. The volume and value of these fines were as much a deterrent as they were a rebuke.
Since then, firms caught up in the off-channel communication enforcements have taken proactive steps to resolve their failings and have, in some instances, capped the bonuses of involved employees. Morgan Stanley, it was rumored, was threatening to dock $1 million from the compensation of some non-compliant employees.
However, if the findings of our report determined anything, the clearest conclusion is that a lack of clarity prevails.
Firms may be getting the message, but that message is not necessarily coming in clearly.
All the while, innovation in communication technology is ever-evolving and fast-paced. Over the next year, global regulators will be looking to modernize existing frameworks to cater to emergent risk. Firms will be tasked with decoding these new obligations, while simultaneously attempting to manage the flow of business communication within their organization.
The complexities and confusion will continue ad infinitum until clarity and consistency are established. Paradoxically, the solution for compliant communication may not be to limit communications, but to seek enablement rather than restriction.
Given the options to be compliant are the prohibition of certain channels or seeking to capture them all, it seems likely that the preferred scenario will be to leverage technology to capture all comms.
The logic is clear: if you capture business communications, you will be compliant. So, if you enable and capture all communication channels, you remove the potential for messages to disappear under the radar, mitigate your risk, and can be confident that your business is communicating compliantly… or spotting instances where it is not.
The solution to managing emerging communication technology may be more technology.
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