TheCorporateCounsel.net

We blogged last June about how corporate communications by public company employees may need to be retained due to generally applicable statutory recordkeeping obligations and that guidance from March clarified that the DOJ expects all companies to maintain and enforce policies to ensure that all “business-related” electronic data and communications are preserved. Ephemeral messaging and off-channel communications got a lot of attention this summer after the SEC settled numerous enforcement actions with broker-dealers and investment advisers. And, in fact, this blog was perfectly timed since the SEC announced a new sweep this morning.

A new development in late January underscores the dangers of business use of ephemeral messaging and off-channel communications beyond the broker-dealer and investment adviser space. The DOJ and FTC announced an update to their preservation notices and instructions for responding to discovery, and the FTC stated that it may even refer cases to criminal prosecutors when companies fail to preserve documents covered by an FTC investigation or action.

This Nelson Mullins alert says the added preservation language clarifies that preservation responsibilities extend to new methods of collaboration, defines “Collaborative Work Environments” and “Messaging Applications” and outlines in detail information that needs to be provided regarding policies and procedures for retention and destruction of documents, including “chats, instant messages, text messages, and other methods of communication.” The language will apply to second requests, voluntary access letters, and compulsory legal processes. The platforms mentioned in the updated guidance include Slack, Microsoft Teams and Signal, but the alert notes that it also covers any other collaboration tools or platforms used, plus social media accounts like X, Facebook, or Snapchat. The alert gives this example:

[I]f a company involved in a merger becomes aware that a second request will be issued but fails to suspend the “auto delete” function of its Microsoft Teams collaboration platform, it may find itself in hot water that runs deeper than the substance of the merger investigation itself.

This McDermott Will & Emery insight suggests the following action items for companies:

– Consider implementing policies to prevent employees from using unapproved apps or personal accounts for business communications
– “Only approve platforms that give IT personnel admin-level control over data retention settings” rather than any that would permit employees to control their own data-retention settings
– Take steps to ensure data will be retained as soon as a litigation or investigation hold is issued on all necessary platforms, including by disabling any autodelete features immediately

– Meredith Ervine