Partner Michael Leotta co-authored an article published in the Journal of Financial Compliance about the potential risks for traditional depository institutions that do not monitor for and prevent off-channel communications.
Excerpt: “The recent off-channel communications settlements reveal that banks and broker-dealers have long had policies prohibiting employees from using unapproved communications channels on their personal devices to communicate about business, but prior to December 2021, these policies went largely unenforced. Indeed, in many cases, senior level supervisors — ‘the very people responsible for supervising employees to prevent this misconduct’ — themselves routinely sent business-related communications using their personal devices. Much of this off-channel communication through personal devices may have occurred during the COVID-19 pandemic, when many employees found themselves working from home, but the settlements reveal that securities personnel were communicating off-channel about business even before the pandemic, and the practice did not necessarily stop when they returned to the office.”