Unauthorized messaging by employees is a growing headache for public companies who face legal and regulatory risks if communications fall outside official channels.
Companies are struggling to stay abreast of messaging among employees equipped with pocket-sized personal computers in their smartphones. Besides having to contend with encrypted apps such as WhatsApp, they face challenges around establishing clear policies and educating their employees about potential risks.
A Department of Justice crackdown on corporate control over employees’ smartphone messages, an SEC probe into use of outside messaging by asset managers and recent settlements totaling $1.8 billion affecting 11 Wall Street banks all point to a heightened regulatory focus on unsupervised employee use of messaging apps.
“We’ve seen it with banks, but every single company has this issue,” said Ian McGinley, a former assistant U.S. attorney in the Southern District of New York. “The SEC and regulators will be looking at other industries and questioning their practices.”
It likely won’t be enough to just have policies and procedures, McGinley, now with Akin Gump, said. “We’re heading towards a regime where you need a technological solution or at least have tried one.”
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