In Regulatory Wrap for the week to July 26, Jennie Clarke discusses ASIC’s recently defined expectations on communications risk and subsequent charges that prove its strict stance on noncompliance.
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In this Regulatory Wrap, we follow movement from the Australian Securities and Investments Commission (ASIC), which was the latest regulator to contribute to the topical subject of communications risk by specify guidelines for supervision and recordkeeping to monitor misconduct. Following up on its expectations, the regulator charged four individuals for involvement in a market manipulation scheme involving the use of unauthorized channels.
1. Following a release that outlined its expectations around communications risk management, ASIC issued charges against four individuals for misconduct that involved off-channel communication over Telegram about how to inflate and sell selected stocks
2. Telegram features include end-to-end encryption and ephemeral messaging, which makes it a favorable channel for misconduct if not compliantly captured
3. A survey by the Investment Advisors Association found that 59% of respondents selected off-channel comms as the “hottest” compliance topic, indicating that firms are approaching the matter with consideration
4. In line with these developments, the Securities and Exchange Commission’s top focus area is books and records, accounting for 58% of its exams
5. As regulators like ASIC continue to chime into the conversation of communications risk, the message is clear that firms must ensure their record retention policies and supervision are in order
This episode is brought to you by our Head of Content, Jennifer Clarke.
Though ASIC just recently joined the communications and recordkeeping conversation, the subject has been a relevant one as enforcements related to message retention failures persist. To stay in the clear, it is important firms take heed of both ASIC and other regulators expectations by assessing their retention policies for and supervision of business communications.
