SEC Keeps Eye on WhatsApp, Signal Usage Despite Trump Changes

Wall Street’s widespread use of electronic communication platforms such as WhatsApp, Signal, and iMessage prompted an SEC sweep of regulated firms’ recordkeeping and surveillance under the past administration, but the regulator is unlikely to abandon the crackdown even as other priorities shift.

In one of his final moves as acting chairman of the Securities and Exchange Commission, Mark Uyeda last week rebuffed 16 financial firms’ bid to trim record-keeping settlements inked with ex-Chair Gary Gensler. Chairman Paul Atkins, President Donald Trump’s full-time pick to lead the agency, was sworn in April 21.

The sprawling WhatsApp investigation led by the SEC and the Commodity Futures Trading Commission netted deals with dozens of Wall Street players, including big banks such as Bank of America Corp. and Citigroup Inc., investment firms such as Ameriprise Financial Inc. and Edward D. Jones & Co., and credit rating companies such as Moody’s Corp. and S&P Global Inc.

Trump’s SEC sent a clear message to the industry by standing firm on some settlements from the Gensler-era probe, signaling that off-channel communications may be a shared priority among otherwise diametrically opposed administrations.

Keeping records of employee chats and carefully selecting which platforms to permit for discussion of securities information will likely remain key to compliance for hedge funds, financial services companies, and advisers to avoid SEC scrutiny going forward.

“The exams division isn’t going to stop looking at this, and they’ve got a defined protocol around it,” said Carlo di Florio, president of compliance firm ACA Group. “If they find that there are issues they observe in an exam, I think under an Atkins administration the first effort will be to try to resolve it and remediate it in an exam context.”

An SEC spokeswoman declined to comment.

Notwithstanding advances in technology to monitor and archive messages on platforms beyond email, off-channel infractions that merit enforcement actions will still catch the SEC’s attention and lead to sizable penalties, according to securities lawyers.

“It was a big money maker—we’re talking $2 billion in less than five years,” said Dee Anne Sjögren, a partner at Faegre Drinker Biddle & Reath LLP, who focuses on financial services. “They can always find somebody that didn’t know somebody was out there on Signal, like our federal government.”

Industrywide ‘Warning Shot’

More than a dozen of the companies that settled off-channel communications cases with the SEC under Gensler—including William Blair & Co., Oppenheimer & Co., and Truist Securities Inc.—sought to modify their deals after January 2025, arguing it would be inequitable to force them to comply with terms that they saw as more onerous than later agency settlements of similar claims.

Unpersuaded by the companies’ argument that they were penalized for striking early deals, the SEC said “settlor’s remorse” doesn’t justify altering a final agreement and declined to modify the settled orders.

In the sole dissent to maintaining the settlements, Commissioner Hester Peirce said the agency should take an “unusual but warranted step” and make additional supervision stipulations voluntary.

“The warning shot has been the frequency, the number of settlements, and the total amount of money that’s been extracted from the industry on this,” said Lance Dial, a partner at K&L Gates LLP and member of the firm’s asset management and investment funds practice. “It’s a clear indication that the SEC isn’t changing their tune on off-channel communications, that this was and remains an important issue.”

Recordkeeping is an important factor in the agency’s examination program, so ensuring that firms capture and surveil activity across WhatsApp, Signal, or other third-party software is unlikely to fall by the wayside.

“I was really surprised with the position the Commission took, that they characterized it as buyer’s remorse, because the firms did the right thing,” Sjögren said. “They settled early and paid big fines.”

Clients Choose WhatsApp

The off-channel communication platforms are popular among both investor clients and advisers, feeding an expectation that a financial services provider will be accessible beyond traditional email and phone options, according to di Florio.

“Firms allow a lot of different channels because their clients want those channels, advisers wants those channels,” he said. “We’re seeing a significant shift to monitoring, surveillance, archiving technology.”

For many investors, WhatsApp and other platforms are standard methods of communicating, meaning SEC-regulated entities would generally prefer compliant use instead of wholesale bans.

“I have had some real-world cases of clients discovering disturbing issues, especially with younger representatives’ use of social media and off-channel communications,” Sjögren said. “I also have clients who do a lot of business overseas, and they’ve been stymied by not being able to use WhatsApp.”

Wall Street professionals hoping to meet clients where they are, or even to communicate with colleagues using quick and informal means, will ultimately inform the SEC’s agenda for investigations, examinations, and enforcement—regardless of who’s in charge.

“This will remain a priority for whatever administration is at the SEC,” Dial said. “Whatever their overall priorities are, in order to enforce them, they’re going to want to have an effective examination and enforcement program, which gives them access to greater records.”