| 14 June 2024, Friday |

US Justice Dept warns of steeper penalties for firms that fall foul of messaging policies

Companies may face harsher penalties for misconduct if they lack policies governing employees’ use of personal cell phones and messaging apps, according to a top US Justice Department official on Friday.

When evaluating compliance programs, federal prosecutors will look into policies for such “off-channel” work communications, said Kenneth Polite, Assistant Attorney General for the Justice Department’s Criminal Division, at an American Bar Association conference in Miami. The new directive is the latest indication of increased government scrutiny of the use of personal devices and apps such as WhatsApp.


The agency will evaluate how companies have crafted policies around the use of such platforms and how they have directed employees on those policies.

Use of such platforms, including ephemeral messaging apps, can complicate government investigations into wrongdoing if companies do not retain the records. That is an issue that prosecutors will address as they investigate wrongdoing, Polite told Reuters in an interview.


“In a lot of circumstances, companies simply don’t have policies at all in this space. They simply haven’t given thought to the challenges that are raised by retaining messages off devices that their employees are dealing with on a regular basis,” he said.

That could mean prosecutors will push for stiffer penalties when negotiating with companies to resolve charges of wrongdoing. But it could also mean lower penalties for some.

“We are looking to reward companies who are being already thoughtful about these kinds of issues,” he said.

Since 2021, firms across Wall Street have been embroiled in investigations by the U.S. Securities and Exchange Commission, a civil regulator, over whether employees’ use of such platforms have broken record-keeping rules.

Those probes have led to hefty penalties for firms including JPMorgan Chase & Co, Barclays, Bank of America, and Morgan Stanley. The agency has more recently opened similar probes into other firms including BlackRock Inc.

The new directive is part of a series of Justice Department policy changes aimed at tackling corporate crime and encouraging companies to be more proactive in reporting misconduct to the government.

Any company seeking to resolve a U.S. investigation will also have to include compliance goals as part of compensation and bonuses, another new policy announced this week.

“They will be required to report back to us on an annual basis about both the design and implementation of those policies,” Polite said.

  • Reuters