The Securities and Exchange Commission continues to crack down on practices around off-channel communications, with the regulator accusing 26 broker/dealers and registered investment advisers this week of “widespread and long-standing failures” to maintain electronic communications.
The firms have agreed to pay a combined civil penalty of $392.75 million to settle the violations. Ameriprise Financial, Edward Jones, LPL Financial and Raymond Jameswhich WealthManagement.com previously reported, had the highest penalty, each agreeing to pay $50 million. RBC Capital Markets will pay $45 million, while BNY Mellon Securities Corp., along with Pershing, will pay $40 million.
Other affected firms include TD Securities, Osaic, Cowen and Company, Piper Sandler & Co., First Trust Portfolios, Apex Clearing, Great Point Capital, P. Schoenfeld Asset Management and Haitong International Securities (USA) Inc.
Three firms self-reported the violations and received lower penalties, including Truist Securities, Cetera and Hilltop Securities.
The Commodity Futures Trading Commission also settled charges against The Toronto Dominion Bank, Cowen and Company and Truist Bank for related conduct.
Specifically, the SEC charged the firms with widespread failures involving personnel at multiple levels, “including supervisors and senior managers,” to comply with record-keeping requirements, particularly for private communications in which employees communicated through personal text messages and through platforms such as WhatsApp.
The firms were also accused of failing to reasonably supervise their staff.
“As today's enforcement actions against more than two dozen firms reflect, we remain committed to ensuring compliance with the books and records requirements of the federal securities laws, which are essential to investor protection and functioning markets. good,” said Gurbir S. Grewal. The Director of the SEC's Enforcement Division, in a statement.
WealthManagement.com reported last week that Raymond James was close to a solution with the SEC to close its investigation into the firm's use of out-of-channel business communications.
At the beginning of this year, LPL Financial's quarterly filings are revealed had decided to close the investigation into out-of-channel communications.
In September 2022, The SEC fined 15 broker/dealers and an investment adviser $1.1 billion to settle allegations of “widespread and long-standing failures” with the compliance practices of firms that meet data retention requirements over messaging and platforms such as WhatsApp. The firms included Bank of America Securities, Citigroup Global Markets, Credit Suisse Securities, Deutsche Bank Securities, Goldman Sachs, Morgan Stanley and UBS.
More settlements followed from, among others, Wells Fargo, Interactive Brokers, Nuveen Securities, HSBC AND Senvest. In February the commission fined 16 firms over $81 million to settle the charges they did not store communications outside the channelincluding Northwestern Mutual, Guggenheim Securities, Oppenheimer & Co. and Cambridge Investment Research.