Tue, June 18, 2024

SEC Probe into WhatsApp Intensifies

SEC Probe into WhatsApp Intensifies

As part of a broader investigation into Wall Street’s use of unofficial messaging services like WhatsApp to do business, US regulators have asked that major hedge funds examine several workers’ personal mobile phones. The Securities and Exchange Commission (SEC) is calling on Point72 Asset Management, Ken Griffin’s Citadel, and a lot of other investment firms to examine the devices for evidence of commercial activities on unlawful channels. The SEC also investigates brokerages, money managers, and private equity companies.

Point72 and Citadel both refused to comment on the matter. Neither of the two received accusations of any wrongdoing. The investigations are part of a larger inquiry sent to numerous hedge funds. The SEC also stayed silent on the matter.

As part of the SEC’s broad investigation into whether financial experts are using unauthorized communications to do things like cut contracts, attract clients, or execute trades, the asset-management sector is swiftly growing as a new battleground.

Is the SEC stepping out of line?

The SEC had asked for information on policies and key personnel from investment companies earlier this year. However, a request to image and review the devices has sparked additional opposition. Gensler received a letter from top business lobby groups on Tuesday, inferring substantial privacy risks.

Copying someone’s mobile phone poses a threat of data breaches as well as exposing extremely personal data. According to the letter, which was signed by the Managed Funds Association, Investment Company Institute, American Investment Council, and the US Chamber of Commerce, among others, this includes health and financial information or passwords.

In comparison to brokerages, money managers have less stringent SEC recordkeeping requirements. Documents related to investment advice are retained. However, to prevent unlawful activity, investment businesses, like banks, have to monitor their business communications.

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