The Securities and Exchange Commission (SEC) has
taken decisive action against 16 broker-dealers and financial advisers, including major players like
Guggenheim and Oppenheimer. These firms face the consequences of failures in maintaining electronic
communications, resulting in combined civil penalties exceeding $81 million.
The SEC‘s investigations uncovered a practice of using unapproved communication methods, known as
off-channel communications, across all 16 firms, the regulator said in a statement today (Friday).
This included personal text messages discussing
business matters and off-channel communications about investment
recommendations and advice. These firms failed to maintain or
preserve most of these communications, violating federal securities laws.
Gurbir Grewal, the Director of the SEC’s Division of
Enforcement, mentioned: “Today’s actions against these 16 firms result
from our continuing efforts to ensure that all regulated entities comply with
the recordkeeping requirements, which are essential to our ability to monitor
and enforce compliance with the federal securities laws.”
As a result of these violations, each firm admitted
the facts outlined in their respective SEC orders and agreed to pay substantial
civil penalties. Northwestern Mutual faces a $16.5 million penalty, Guggenheim
$15 million, Oppenheimer $12 million, Cambridge $10 million, Key $10 million,
Lincoln $8.5 million, U.S. Bancorp $8 million, and Huntington $1.25 million.
SEC’s Regulatory Scrutiny
Notably, Huntington’s penalty reflects its voluntary
self-report and cooperation. The SEC charged each firm with violating
recordkeeping provisions and failing to prevent and detect these violations. The lapses involved employees at various levels,
including supervisors and senior managers. Beyond financial penalties, the
firms were censured and ordered to cease future violations.
Additionally, the companies were ordered to retain independent compliance
consultants to conduct thorough reviews of their policies and procedures,
especially regarding the retention of electronic communications found on
personal devices.
Last year, the SEC fined ten financial firms $79 million for alleged lapses in recordkeeping. This crackdown revealed a pattern of inadequate electronic communication practices across broker-dealers and investment advisers.
The SEC’s enforcement actions targeted five broker-dealers, three dually registered broker-dealers and investment advisers, and two affiliated investment advisers. Alongside the hefty financial penalties, the securities watchdog mandated that each offending firm cease any future violations of recordkeeping provisions.
The Securities and Exchange Commission (SEC) has
taken decisive action against 16 broker-dealers and financial advisers, including major players like
Guggenheim and Oppenheimer. These firms face the consequences of failures in maintaining electronic
communications, resulting in combined civil penalties exceeding $81 million.
The SEC‘s investigations uncovered a practice of using unapproved communication methods, known as
off-channel communications, across all 16 firms, the regulator said in a statement today (Friday).
This included personal text messages discussing
business matters and off-channel communications about investment
recommendations and advice. These firms failed to maintain or
preserve most of these communications, violating federal securities laws.
Gurbir Grewal, the Director of the SEC’s Division of
Enforcement, mentioned: “Today’s actions against these 16 firms result
from our continuing efforts to ensure that all regulated entities comply with
the recordkeeping requirements, which are essential to our ability to monitor
and enforce compliance with the federal securities laws.”
As a result of these violations, each firm admitted
the facts outlined in their respective SEC orders and agreed to pay substantial
civil penalties. Northwestern Mutual faces a $16.5 million penalty, Guggenheim
$15 million, Oppenheimer $12 million, Cambridge $10 million, Key $10 million,
Lincoln $8.5 million, U.S. Bancorp $8 million, and Huntington $1.25 million.
SEC’s Regulatory Scrutiny
Notably, Huntington’s penalty reflects its voluntary
self-report and cooperation. The SEC charged each firm with violating
recordkeeping provisions and failing to prevent and detect these violations. The lapses involved employees at various levels,
including supervisors and senior managers. Beyond financial penalties, the
firms were censured and ordered to cease future violations.
Additionally, the companies were ordered to retain independent compliance
consultants to conduct thorough reviews of their policies and procedures,
especially regarding the retention of electronic communications found on
personal devices.
Last year, the SEC fined ten financial firms $79 million for alleged lapses in recordkeeping. This crackdown revealed a pattern of inadequate electronic communication practices across broker-dealers and investment advisers.
The SEC’s enforcement actions targeted five broker-dealers, three dually registered broker-dealers and investment advisers, and two affiliated investment advisers. Alongside the hefty financial penalties, the securities watchdog mandated that each offending firm cease any future violations of recordkeeping provisions.
