Chris Prentice and Jody Gooy

WASHINGTON, (Reuters) – The U.S. Securities and Exchange Commission has launched a wide inquiry into the way Wall Street banks keep track of digital communications by employees. Three people who are familiar with this matter informed Reuters.

SEC enforcement personnel contacted several banks to verify that they had been properly documenting employee work-related communications such as email and text messages. They also focused on personal devices.

This industry “sweep” shows that the SEC has increased enforcement under Democratic leadership. It also highlights the difficulties Wall Street banks have keeping track of staff communications during the work-from home pandemic.

To quickly collect information about issues that may be common, the SEC conducts periodic sweeps. Sometimes, but not always, sweeps lead to formal probes.

According to two sources, the investigation appears to have been initiated by the agency, which has been looking into a single financial institution for some time. The source did not identify the company.

In August, JPMorgan Chase & Co (NYSE:) disclosed that it had been fielding regulatory inquiries concerning its “compliance with records preservation requirements in connection with business communications sent over electronic messaging channels” that the bank had not approved. Without naming the regulators involved, it said they were in talks to resolve this issue.

JPMorgan spokespeople and SEC spokespersons declined to comment.

Broker-dealers are required by the SEC, and Financial Industry Regulatory Authority (Wall Street’s self regulation body), to maintain records of any business-related communications. According to one source, banks have to be careful not to violate employees’ privacy while complying with these regulations.

The source stated that while there are no legal grounds for an employer to demand access to employees’ communications in the United States of America, it is possible for them to do so elsewhere. However, this could be a violation of data protection laws.

Many financial companies have banned the use of social media for personal purposes such as text messages and email. However, it is difficult for businesses to keep up with the proliferation of communications apps, especially in the midst of the pandemic.

Gurbir Grewal (SEC’s Head of Enforcement) warned institutions last week about the numerous “issues raised” by personal devices and new communication channels. For speech – https://www.sec.gov/news/speech/grewal-pli-broker-dealer-regulation-and-enforcement-100621

Grewal stated in remarks that failure to preserve and produce communications records could hinder regulatory investigations.

The last year was Morgan Stanley Two top executives at the (NYSE:) were fired for using WhatsApp without authorization to talk about work issues.