SEC fines investment advisors, broker-dealers $63M for record-keeping failures

The Securities and Exchange Commission has announced multi-million dollar penalties for investment advisors and broker dealers, mostly resulting from record-keeping failures.

A combined $63.1 million in fines were handed out to 12 firms – nine investment advisors and three broker-dealers - to settle charges resulting from firms failing to main and preserve electronic communications. 

The SEC investigations found use of off-channel communication methods in each of the cases and the failures to ensure compliance involved personnel of all levels of authority including supervisors senior managers.

One of the firms self-reported to the SEC and received a penalty of several hundred thousand dollars rather than the far larger fines paid by the others.

The firms involved were:

• Blackstone Alternative Credit Advisors LP, together with Blackstone Management Partners L.L.C. and Blackstone Real Estate Advisors L.P., agreed to pay a combined $12 million penalty;
• Kohlberg Kravis Roberts & Co. L.P. agreed to pay a $11 million penalty;
• Charles Schwab & Co., Inc. agreed to pay a $10 million penalty;
• Apollo Capital Management L.P. agreed to pay a $8.5 million penalty;
• Carlyle Investment Management L.L.C., together with Carlyle Global Credit Investment Management L.L.C., and AlpInvest Partners B.V., agreed to pay a combined $8.5 million penalty;
• TPG Capital Advisors LLC agreed to pay an $8.5 million penalty;
• Santander US Capital Markets LLC agreed to pay a $4 million penalty;
• PJT Partners LP, which self-reported, agreed to pay a $600,000 penalty.

“In order to effectively carry out their oversight responsibilities, the Commission’s Examinations and Enforcement Divisions must, and indeed do, rely heavily on registrants complying with the books and records requirements of the federal securities laws,” said Sanjay Wadhwa, acting director of the SEC’s Division of Enforcement. “When firms fall short of those obligations, the consequences go far beyond deficient document productions; such failures implicate the transparency and the integrity of the markets and their participants, like the firms at issue here.”