In a bold move, a financial industry trade association has taken legal action against the U.S. Securities and Exchange Commission (SEC), demanding transparency about the agency’s intense scrutiny of how banks and firms manage work-related communications on personal devices. This probe, which began in late 2021, has already racked up over $1.7 billion in civil fines.
The lawsuit, filed by the American Securities Association in Tampa federal court, claims the SEC unlawfully denied their request for detailed records under federal public records law. This enforcement initiative has ensnared big names like JPMorgan Chase, Credit Suisse, Wells Fargo, Goldman Sachs, and Morgan Stanley, with allegations of record-keeping failures related to employees’ “off-channel” communications. Notably, none of these firms have admitted to any wrongdoing.
“The SEC’s penalty decisions seem arbitrary and unexplained,” the association argued in its lawsuit. The SEC has remained tight-lipped, citing the potential risk to ongoing or future enforcement actions if the records were disclosed.
Chris Iacovella, CEO of the American Securities Association, criticized the SEC for not adhering to federal transparency requirements, stressing that the public deserves insight into the enforcement process. The association has enlisted the conservative-leaning law firm Consovoy McCarthy to spearhead the lawsuit, which demands access to internal emails, memos, and any standards or guidelines that informed the SEC’s penalty decisions.
The lawsuit challenges the SEC’s stance on withholding documents, arguing that the agency shouldn’t conceal information simply because other enforcement actions might be pending.
This legal clash is unfolding in the case American Securities Association v. U.S. Securities and Exchange Commission, U.S. District Court for the Middle District of Florida, No. 8:24-cv-01377.
The SEC has yet to respond officially to the lawsuit.
