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> My personal view is that the SEC just wants to ban all finance employees from ever being allowed to use encrypted messaging (9mm people in the US), which woul

by simonh 5y ago

> My personal view is that the SEC just wants to ban all finance employees from ever being allowed to use encrypted messaging (9mm people in the US), which would then put pressure on Facebook to decrypt its messenger (the government's actual goal). I’m afraid your completely off base on the purpose of these regulations and the interests of the SEC. Don’t feel bad or take this personally, such misunderstanding are common outside the industry, until I worked for an investment bank I didn’t know any of this either. The purpose of the regulations is auditability and accountability. Financial institutions must record all communications pertaining to trading so that it can be scrutinised by the SEC and provided to courts in case of a dispute. The SEC is absolutely fine with these communications being encrypted, as long as they are logged by the employer. The SEC has no problem whatever with people in finance using Facebook for private communication that’s nothing to do with trading, where then it’s encrypted or not, because that’s entirely beyond their remit. However persons covered by the regulations may be required to provide copies of their private communications, in order to show that they were not using those channels to discuss regulated activity. They have to sign contracts affirming that they will do this if requested to.

kolbe 5y ago
Don't feel bad. I've been in the industry. I've been fined for failing to log communications properly. I've been in conversations with Katten about this very topic, and you are not correct. My fine happened to be that we logged every single piece of email communication, but we used a vendor who wasn't Finra approved to do the logging. The idea that the SEC cares about logging communications is most certainly the pitch that they give for why they're doing what they're doing. But it's not reality. These fines exist for exactly two purposes: (1) so the government can put out PR that they're totally doing their job and regulating the banks, when we all know they are just a revolving door to the banks. And (2) to create 'regulatory capture' for the banks, who will gladly fork over a few hundred million per year so long as it makes it too difficult for their competitors to navigate the regulatory landscape. As we were told, there's mostly nothing you can do to avoid the fines. They invent a new reason to fine you ever year. View it as a tax, and hope they don't raise the taxes next year. > The SEC is absolutely fine with these communications being encrypted, as long as they are logged by the employer. From a factual standpoint, this is just wrong. Unless you mean they log the decrypted messages. The SEC has rules about the format you must log in, and encrypted is not one of them.

by simonh 5y ago

kolbe 5y ago

Don't feel bad. I've been in the industry. I've been fined for failing to log communications properly. I've been in conversations with Katten about this very topic, and you are not correct. My fine happened to be that we logged every single piece of email communication, but we used a vendor who wasn't Finra approved to do the logging. The idea that the SEC cares about logging communications is most certainly the pitch that they give for why they're doing what they're doing. But it's not reality. These fines exist for exactly two purposes: (1) so the government can put out PR that they're totally doing their job and regulating the banks, when we all know they are just a revolving door to the banks. And (2) to create 'regulatory capture' for the banks, who will gladly fork over a few hundred million per year so long as it makes it too difficult for their competitors to navigate the regulatory landscape. As we were told, there's mostly nothing you can do to avoid the fines. They invent a new reason to fine you ever year. View it as a tax, and hope they don't raise the taxes next year. > The SEC is absolutely fine with these communications being encrypted, as long as they are logged by the employer. From a factual standpoint, this is just wrong. Unless you mean they log the decrypted messages. The SEC has rules about the format you must log in, and encrypted is not one of them.