Is the Sweep of Advisors' Texting Legal? — SEC Roundup
Welcome to SEC Roundup, a bimonthly video series by Paul Hastings partners and former Securities and Exchange Commission senior trial counsels Nick Morgan and Tom Zaccaro exploring current SEC topics with thought leaders and industry experts.
In this episode, Morgan and Zaccaro talk with Jennifer Han, chief counsel and head of regulatory affairs at the Managed Funds Association, about how the SEC’s sweep of advisors’ off-channel communications may exceed the SEC’s authority, invade the privacy of employees and clients, and increase costs that may ultimately be borne by investors.
The SEC is reportedly expanding its so-called WhatsApp probe to include off-channel communications by investment advisor employees, prompting a bevy of industry groups to cry foul.
“It’s become known the SEC is conducting an enforcement sweep of investment advisors,” Han said. “What we are picking up is that they [the SEC] are very much treating advisors as they were subject to the same requirements as broker-dealers.”
However, investment advisors are “under a different regime,” Han relays. Advisors, for instance, under the Advisers’ Act recordkeeping rule, “are not required to keep all electronic communications.”
See the video above for the discussion with Han.
