By The Securities and Exchange Commission (SEC) recently announced that it has reached settlements with 16 different firms, resulting in a total of $81 million in fines. These fines are related to widespread violations of recordkeeping requirements associated with the use of off-channel communications, such as text messages, to conduct business.
In its orders against these broker-dealers and investment advisers, the SEC revealed that the firms admitted to the facts and acknowledged that their actions constituted a violation of federal securities law. As part of the settlements, the firms have agreed to pay civil penalties and implement significant changes to their compliance protocols.
Notable names among the implicated firms include Northwestern Mutual Investment Services, Guggenheim Securities, and Oppenheimer & Co. However, it is worth noting that Huntington Investment Company, Huntington Securities, and Capstone Capital Markets will pay the smallest fine, amounting to $1.25 million. These three firms self-reported their violations and were commended by SEC Enforcement Director Gurbir Grewal for their voluntary disclosure and cooperation.
The SEC’s investigation uncovered “pervasive and longstanding uses of unapproved communication methods” within these firms. This finding aligns with the agency’s ongoing effort to crackdown on financial institutions that fail to comply with federal securities law regarding off-channel communications and the preservation of such communications.
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