I don't see a downside to expanding the record keeping requirements. Record keeping is easier than ever and frankly banks haven't proven themselves worthy of our trust. Sounds great to me.
I don't think I disagree and I don't think Matt does either.
The point is that from a bank employee perspective, a hallway conversation, a text message, and a WhatsApp chat might seem pretty similar, and no one expected face to face chats to be memorialized in preserved records, so why the other two?
So in a meaningful sense, the requirements around preservation have expanded significantly, and it shouldn't be a surprise that a lot of banks ended up breaking the rules.
> My point here is that when these rules were written, it would have been absurd to say that brokers had to “appropriately conduct their communications about business matters within only official channels.” Everyone understood, in 1948, that only a small sliver of business was conducted in formal letters and memoranda, and that mostly you’d talk about business face-to-face. “As technology changes,” lots of forms of written electronic communication become substitutes not for memoranda, but for face-to-face conversation. So the SEC’s requirements constantly become broader. If you just talk to your colleagues in person, the SEC does not expect you to preserve that. Once you move that chat to WhatsApp, it does.
Now the SEC has run around fining a bunch of institutions and sent a message, and so you can expect compliance will improve.
As an aside, you'll notice that piece was written nearly a year ago, so this isn't exactly a new story.
I assume being able to have face to face off the record conversations providing plausible deniability to participants is one of the big reasons finance and other related businesses like to be in Manhattan.
Perhaps also a factor in why some managers prefer to manage employees in-person rather than remotely.
When it comes to avoiding the record, it doesn't have to be lofty corrupt/ish deals or schemes, but also cases like certain anti-union threats, or even plain personal power-tripping.
The point is that from a bank employee perspective, a hallway conversation, a text message, and a WhatsApp chat might seem pretty similar, and no one expected face to face chats to be memorialized in preserved records, so why the other two?
So in a meaningful sense, the requirements around preservation have expanded significantly, and it shouldn't be a surprise that a lot of banks ended up breaking the rules.
As he writes in another piece (https://news.bloomberglaw.com/mergers-and-acquisitions/matt-...):
> My point here is that when these rules were written, it would have been absurd to say that brokers had to “appropriately conduct their communications about business matters within only official channels.” Everyone understood, in 1948, that only a small sliver of business was conducted in formal letters and memoranda, and that mostly you’d talk about business face-to-face. “As technology changes,” lots of forms of written electronic communication become substitutes not for memoranda, but for face-to-face conversation. So the SEC’s requirements constantly become broader. If you just talk to your colleagues in person, the SEC does not expect you to preserve that. Once you move that chat to WhatsApp, it does.
Now the SEC has run around fining a bunch of institutions and sent a message, and so you can expect compliance will improve.
As an aside, you'll notice that piece was written nearly a year ago, so this isn't exactly a new story.