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Enforce penalties for texting, especially among deal and IR teams

NAREIM Legal, Compliance & Risk meeting key takeaways

Nov 8, 2023

Real estate investment managers need to train teams on communications compliance "like there’s no tomorrow” and start enforcing penalties for texting and other off-channel conversations.

Members attending NAREIM’s Legal, Compliance & Risk meeting in NYC this week discussed recent SEC enforcement on record-keeping failures and off-channel communications.

The takeaway? 

Enforce a disciplinary policy when it comes to off-channel communications, especially texting between deals teams and brokers/JV partners and anyone dealing with investors.

Members heard the SEC is taking a much stricter approach to communications between management firms and people involved in an asset or deal, such as partners and brokers, and investors, with the latest multi-million dollar fines announced in September.

In roundtables, members shared how they were adopting the rules for their teams:

  • Provide advance notice to employees that text messages can and will be checked

  • Adopt tech solutions that capture text messages and off-channel comms directly from an employee phone. Tools included Mobius, Global Relay and Smarsh.

  • Create more on-channel communications – eg, direct message through Teams.

  • Create a disciplinary committee and enforce penalties. Start at messaging, bring in managers, C-suite, impose financial fines and termination for the most serious offenses.

  • Shame bad behavior. Anonymize and display bad behavior and inappropriate texts/communications by displaying them to employees during training.

  • Train the next generation/junior talent very well. They text all the time.

  • Tell everyone: “Write as if you are bcc-ing the regulators every time you send something.”

  • Inbound text/off-channel communications – tell employees to push the person to email to continue the conversation if there’s no capture tool on a mobile.

Every real estate investment manager will be forced to deal with off-channel communications, the meeting heard. “Everyone should sit up and take notice about this,” members were told.

Other key takeaways from the NAREIM Legal, Compliance & Risk meeting included:

  • Managers may have to open their data rooms to every investor – and reveal every fee break given to any LP – if the SEC’s private funds rules goes into effect. The fear is that the rules - which are currently being challenged in court by six private equity associations - could result in investors delaying being part of a first close in order to see what breaks are provided for other LPs.

  • Members also raised concerns over the impact of the SEC’s private fund rules on quarterly statements. There’s nothing the SEC will not write up, the meeting heard, with SEC examiners looking at all expenses “to the dollar”, irrespective of whether that expense or fee was a $2,000 FedEx bill or a $20m fee. 

The attendee list and presentations can be accessed by emailing IvyLee Rosario at

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