SEC Should Adapt Off-Channel Communications Rules for 21st Century
Washington, DC; May 1, 2026— The Securities and Exchange Commission (SEC) should modernize the Recordkeeping Rule under the Investment Advisers Act of 1940 to better reflect the realities of modern technology, the Investment Company Institute (ICI) wrote in a joint letter with the Investment Adviser Association (IAA) today.
“We applaud Chairman Atkins for his work to refocus the SEC’s enforcement efforts on cases correcting investor harms. Off-channel communications cases involving asset managers under prior SEC leadership saw vastly disproportionate penalties levied for employees using personal devices to send text messages,” said ICI President and CEO Eric J. Pan. “Updating the recordkeeping framework would be a significant step toward achieving our shared goals of investor protection and strengthening market integrity.”
The rule was originally drafted in 1961, and the way organizations communicate, use technology, and account for cybersecurity needs was not anticipated at that time. The ICI letter recommends that the Recordkeeping Rule be adaptable as technologies and business practices continue to evolve. The revised rule should also strike a balance between investor protection measures and the increasing burdens of retention requirements for advisers.
Under previous SEC leadership, advisors were heavily penalized for recordkeeping violations despite good faith efforts to comply. The current Commission has noted that ‘these cases identified no direct investor harm from those violations, produced no investor benefit or protection, and demonstrate what the current Commission views as a misinterpretation of the federal securities laws, a misallocation of Commission resources, and a bias for volume of cases brought versus matters of investor protection.’
ICI welcomes Chairman Atkins’ revised guidelines, which hold advisors accountable while ensuring robust protection for investors. These guidelines avoid setting unreasonably high or unattainable requirements. To support the industry’s robust compliance efforts, the Commission should avoid imposing a strict liability standard and create a safe harbor under the Recordkeeping Rule. The off-channel communications cases displayed the near-impossibility of compliance under a strict liability standard.
The letter also urges the Commission to consider potential cybersecurity and data privacy risks. If privacy and cybersecurity risks are not addressed alongside retention requirements, the rule may inadvertently increase exposure and ultimately harm retail investors.
Read the full letter here.