SEC Settles Charges with 16 Firms for Recordkeeping Failures

On February 9, the Securities and Exchange Commission (SEC) announced the latest round of settlements associated with “off-channel” communications totaling combined civil penalties of $81 million dollars. In this latest round, the settling parties included five broker-dealers, seven dually registered broker-dealers and investment advisers, and four affiliated investment advisers, with each admitting that their employees communicated firm business through unapproved, personal messaging platforms. Failures involved employees at varying seniority levels, including supervisors and senior managers. The first round of recordkeeping failures occurred in September 2023 and involved 10 separate entities.

According to the press release, “[b]y failing to maintain and preserve required records, certain of the firms likely deprived the SEC of these off-channel communications in various SEC investigations.” Of interest, the Commission’s Director of the Division of Enforcement, Grubir Grewal, noted a firm and its related subsidiaries that self-reported violations paid a $1.25 million civil penalty, while the other firms, which did not self-report, agreed to pay penalties ranging from $8 million to $16.5 million.

Click here to read the Commission press release covering the settlements.