The U.S. Securities and Exchange Commission, or SEC, has reportedly collected thousands of messages from a broad range of high-profile investment firms. This is part of an escalating investigation into Wall Street’s usage of private messaging applications.

What Happened: The SEC has been gathering messages from staff at over a dozen leading investment firms, reported Reuters, citing four people with direct knowledge of the matter. 

Initially, the SEC had asked these firms to internally review messages to investigate the employment of unapproved messaging apps like WhatsApp-owned by Meta Platforms Inc. (NASDAQ:META) and Signal for business communication.

This part of the crackdown, which has been ongoing for two years, initially focused on broker-dealers and resulted in more than $2 billion in fines. The latest intensification of the investigation encompasses an analysis of thousands of staff messages, thus raising the stakes for the companies and executives involved.

See Also: Tax Cuts From The Bush And Trump Eras Have Cost The Government $10 Trillion It Now Owes

Executives handed over their personal devices to their employers or lawyers for copying, and the messages discussing business were then shared with the SEC, the report noted, citing three sources who have confirmed this development.  

Why It Matters: This increased scrutiny by the SEC is significant. 

It comes in the wake of a record-keeping issue that surfaced when JPMorgan Chase (NYSE:JPM) failed to provide certain documents in 2018 during an unrelated investigation. 

This led the SEC to widen its investigation into other broker-dealers’ communications. 

In September 2022, the SEC penalized 16 Wall Street firms for using personal devices to discuss trades and clients, as detailed in this Benzinga article.

While government investigations do not necessarily result in charges, the SEC’s heightened focus on private fund fees, conflicts of interest, and preferential treatment of investors has raised industry concerns.

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