In appearances last week, Securities and Exchange Commission (SEC) chairman, Gary Gensler, said that his agency is focused on addressing market manipulation that takes place on social media, as well as insider trading.
The WSJ asked Gensler about revelations that the SEC wrote to Tesla CEO Elon Musk complaining that he had violated a 2018 settlement to pre-submit tweets that discuss production figures for his various companies. Gensler declined to comment on Tesla specifically but noted that technological advances will always create tensions between the SEC and the companies it oversees. He pointed to the short squeezes in shares of Gamestop Corp.
“We’ve seen this from the market, from the events in January, that social and trading platforms came together and we saw volatility,” the chairman said. “I would say it’s important, and this happened as well in the 1990s, when the internet came along, that traditional fraud used to be in paper form or in speeches and then moved to the internet. If it moves to social media, still we are going to ensure the best that we can within our resources to tamp out fraud and manipulation.”
“Rules mostly adopted 16 years ago do not fully reflect today’s technology. I believe it’s appropriate to look at ways to freshen up the SEC’s rules,” Gensler said in prepared remarks at the Global Exchange and FinTech Conference. “Today, technology has changed how market makers interact, how trading platforms compete, how investors access those markets and the economic incentives amongst these various market participants. Further, retail investors can trade over commission-free brokerage apps. That wasn’t the case even a few years ago.” The comments followed the WSJ CFO Network Summit appearance.
Takeaway for firms: archive social media
The above emphasizes the importance of keeping pace with technology changes and capturing all electronic communications data — including social media. Modern archiving and compliance solutions should be purpose-built to ingest and preserve communications generated on all modern channels. Make sure the solution is compliant with the regulatory rules and has the technical ability to capture popular apps and tools like Twitter, TikTok, Facebook, Slack, LinkedIn, and text messages. Having a centralized archiving solution to search for all your communications content and related data is far more efficient and effective than using separate, unintegrated point solutions.
We recommend selecting a platform that includes critical supervision capabilities, such as flagging keyword lexicons, random sampling, and robust reporting options. As communications continue to evolve and multiply, the use of advanced analytics, artificial intelligence and machine learning capabilities can help firms monitor and mitigate risk more precisely, at scale. In addition, communications data contains a wealth of knowledge about your organization that can be analyzed to optimize your processes and business strategy — another critical component of effective risk management and market domination.
Staying current with technology will prepare your firm for changing regulatory demands and expectations. The regulators are aware of the rapidly changing technology landscape as electronic communications are under the regulatory microscope.
Author: Marianna Shafir Esq. Regulatory Advisor at Smarsh
Marianna Shafir, Regulatory Advisor at Smarsh, is responsible for regulatory affairs worldwide. With her expertise in financial services industry, compliance and e-discovery, Marianna counsels Smarsh clients on meeting regulatory obligations, leveraging technology and guidance on best practices related to electronic communications supervision. Prior to joining Smarsh, Marianna worked for BNY Mellon and Invesco where she was an instrumental member on compliance teams.Marianna has also served as an adjunct professor at New York Career Institute where she taught Law Office Management and Real Estate Law. She earned her Juris Doctorate from Nova Southeastern University. She is a frequent speaker at industry conferences and a contributor to various online publications.
Our range of innovative solutions can be tailored to suit your unique requirements, no matter whether you’re currently working from home, or are continuing to go into the office. Our services can be deployed individually or combined to form a broader solution to release your energies and focus on your clients.