SEC investigation into WhatsApp use reaches hedge funds

The US Securities and Exchange Commission (SEC) recently asked Steve Cohen’s Point72 Asset Management, Ken Griffin’s Citadel, and several other firms to review the devices for evidence of deals. commercials on unapproved channels, according to people with knowledge of the matter who asked not to be identified because it is a private matter.

The SEC is also investigating the practices of stockbrokers, fund managers, and venture capital firms.

Representatives for Point72 and Citadel declined to comment. Neither company has been accused of wrongdoing. The investigations are part of a broader request that also included other hedge funds, the people said. The SEC declined to comment.

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The asset management industry is quickly becoming the new front line in the SEC’s sweeping investigation into whether financial professionals use off-the-record communications to close deals, solicit clients or conduct transactions.

Under the chairmanship of Gary Gensler, the agency has focused on this matter, arguing that activities conducted outside the sight of a company’s compliance department can make it more difficult for the regulator to further investigate possible wrongdoing. The SEC has already fined banks more than $1 billion for violations.

Although the sec Having previously asked investment firms for information about policies and key personnel whose text messages and emails are supposed to be archived, the request to obtain images and review the devices has sparked further protests. On Tuesday, major industry groups sent a letter to Gensler, citing “serious privacy implications.”

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According to the letter, signed by the Managed Funds Association, the Investment Company Institute, the American Investment Council and the US Chamber of Commerce, among others, making copies of users’ phones poses risks of data leakage and information exposure. very personal, such as health and financial data or passwords.

In general, fund managers face less stringent SEC record-keeping rules than broker-dealers, as the hold focuses on documents related to investment advice. But investment firms, like banks, are required to monitor communications related to their business to prevent misconduct.