SEC Fines Firms for Not Spying on the Private Phones of Employees

​The Wall Street Journal editorial page beat us to the punch to be the first to call the Securities and Exchange Commission the “Surveillance and Exchange Commission.”
 
It is an apt description, increasingly not a stretch or even a bit of sarcasm.
 
In April we reported that the SEC had taken it upon itself, authorized by no law and under no Congressional or judicial oversight, to create a huge database called the Consolidated Audit Trail. This database allows 3,000 government employees to track, in real time, the identities of tens of millions of Americans who buy and sell stocks and other securities.
 
In June we reported on the protest of state auditors and treasurers in 23 states over this program, which allows government agents to conduct fishing expeditions with the data of millions of Americans who’ve done nothing wrong or suspicious. The state financial officers wrote: “Traditionally, Americans’ financial holdings are kept between them and their broker, not them, their broker, and a massive government database. The only exception has been legal investigations with a warrant.”
 
Now it has come to light, thanks to The Journal, that the SEC fined 26 financial firms almost $400 million for failing to track the private communications of their employees on their personal phones. Most financial firms already enforce policies that prohibit their employees from using their personal devices and messaging apps like WhatsApp for business. But until now, it was not the business of an employer to force employees to hand over their personal phones for inspection.
 
Under this mandate from the SEC, firms must search the personal phones of their employees for evidence of business-related communications. Unlike the Consolidated Audit Trail database, which is government operated, the SEC is outsourcing the task of monitoring of the communications of hundreds of thousands of Americans to their employers. This is a sneaky move. Making employers into the government’s spies obviates the pesky need to worry about niceties like the Fourth Amendment and probable cause warrants. Never mind that the SEC fails to report any crimes or rule-bending from all this surveillance.
 
Readers will recall that a wave of protest prevented the reporting of all financial transactions to the government in excess of $600. But the broad movement to collect, record, and analyze the financial lives of all Americans is ongoing. And the Surveillance and Exchange Commission is its leader.