Messaging Apps Come Under Increasing Regulatory Scrutiny

As enforcement actions increase, the intensifying spotlight on WhatsApp and other ubiquitous mobile texting software is prompting many companies to actively seek legal guidance and make compliance and technology changes, while some in the lesser regulated space may be taking more of a “wait-and-see” approach. Already this year, the SEC, FINRA and CFTC have lodged enforcement actions against companies over improper use of off-channel messaging apps, and the DOJ issued updated guidance in March on its expectations for compliance programs, including a warning that all companies facing investigations are expected to have stated policies and procedures around usage. “There is no easy solution yet, and that is why companies are grappling with this,” said Nisa Gosselink-Ulep, partner at Paul Hastings, who has been fielding questions from domestic and multinational clients alike on how to put the DOJ directives into practice within an existing compliance practice. “If it was easy, we would all go out and buy the software and be done with it. We are not there,” she said. This article offers a glimpse into current corporate concerns about messaging apps and how partners at Ballard Spahr and Paul Hastings are helping clients address them. See “SEC Remains Focused on Off-Channel Communications” (May 11, 2023).

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