The U.S. securities regulator has collected thousands of staff messages from more than a dozen major investment companies, escalating its probe into Wall Street's use of private messaging apps, said four people with direct knowledge of the matter.
, according to three people with direct knowledge of the matter, as well as some hedge funds, including Citadel, said a different person with direct knowledge.
The executives gave their personal phones and other devices to their employers or lawyers to be copied, and messages discussing business have been handed to the SEC, three people said. That is in contrast to the broker-dealer probes. In those cases, the SEC asked companies to review staff messages and report to the agency how many discussed work. SEC staff reviewed only a sample of messages themselves, according to three sources with knowledge of the previous investigations.At least 16 firms including Carlyle, Apollo, KKR, TPG, and Blackstone, have disclosed that the SEC is probing their communications.
"Now that they have all that data - it is very possible that the SEC will find compliance failures in there somewhere that have nothing to do with the off-channel communications record-keeping issues," said Jaclyn Grodin, a lawyer at Goulston & Storrs who is not involved in the investigation. Private fund fees and expenses, conflicts of interest and preferential treatment of investors are issues the SEC isThe problem of keeping tabs on staff communications has dogged Wall Street compliance departments for years. Because companies do not surveil personal messaging channels, using them to discuss business puts SEC-regulated employers in breach of requirements to record all business communications.
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