SEC Remains Focused on Off-Channel Communications

Maintaining appropriate business records is a fundamental compliance duty and a core component of the SEC’s examination and enforcement regime, stressed Seward & Kissel partner Russell Johnston in a recent firm presentation. Failure to preserve records undermines the agency’s ability to protect investors and ensure market integrity. In recent years, the SEC has zeroed in on how firms monitor and maintain records of so-called “off-channel” electronic communications, imposing $2 billion in penalties on firms that failed to do so. Johnston and Seward & Kissel partners Debra Franzese, Philip Moustakis and Michael Watling discussed the SEC’s recent enforcement actions involving off-channel communications, its pending sweep of investment advisers and what advisers can do to ensure they have appropriately addressed use of off-channel communications and prepared for the inevitable examination on the issue. This article distills their insights. See “Former SEC Enforcement Official Looks Back at 2022 and Forward to 2023” (Jan. 5, 2023); and “Present and Former SEC Officials Discuss Enforcement (Part Two of Two)” (Jun. 9, 2022).

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