The Securities and Exchange Commission (SEC) is expanding its investigation into the usage of WhatsApp for business transactions on Wall Street to encompass significant hedge funds, as reported by Bloomberg.
The SEC has requested that several firms, including Point72 Asset Management and Citadel, examine the phones of certain employees to uncover evidence of business communications conducted via WhatsApp and other unauthorized channels.
Previously, the SEC sought information regarding hedge funds’ policies on the archiving of employee texts and emails. However, the current request involves obtaining copies of specific phones for detailed review.
The move has sparked pushback from the industry, with trade organizations expressing concerns in letters to SEC chair Gary Gensler about the “serious privacy implications” tied to the potential exposure of sensitive health and financial information, according to Bloomberg.
In the previous year, the SEC imposed over $1 billion in fines on several major Wall Street banks due to the use of personal messaging services by traders and brokers to discuss investment agreements, client meetings, and various business matters.
In response to the intensified scrutiny, Morgan Stanley has begun issuing millions of dollars in fines to its bankers for utilizing WhatsApp for business transactions.