A fresh slate of Wall Street firms agreed to collectively pay tens of millions of dollars to U.S. regulators over their employees’ use of unmonitored communication channels on the job.
The Securities and Exchange Commission said Friday that the firms, including Interactive Brokers Group Inc. and Robert W. Baird & Co. Inc., had broken rules that require employees’ business communications to be saved. In all, the companies agreed to pay $79 million in SEC penalties, according to the regulator.
Financial firms are required to monitor and save communications involving their business to head off improper conduct. Friday’s penalties add to to the more than $2.5 billion that big banks previously agreed to pay the SEC and the Commodity Futures Trading Commission to settle similar investigations into use of text messages on personal phones and WhatsApp.
Regulators say it is significantly harder to investigate wrongdoing when firms fail to save records. Gurbir Grewal, the SEC’s enforcement director, has made companies’ record-keeping lapses a priority since he took office in 2021.
In the two largest SEC fines announced Friday, Interactive Brokers and an affiliate will pay $35 million, while Baird will pay $15 million, the SEC said. William Blair & Co., Nuveen, Fifth Third Bancorp, and Perella Weinberg Partners also agreed to pay smaller multimillion-dollar fines.
Interactive Brokers also agreed to pay the CFTC $20 million to resolve the futures regulator’s probe into its communication practices.
“It was well known within these institutions that their internal policies were being flagrantly violated in practice. But no one stopped it,” Christy Goldsmith Romero, a Democratic CFTC commissioner, said in a statement.
Interactive Brokers, William Blair, Fifth Third, and Perella Weinberg declined to comment. Nuveen said it was pleased to have resolved the matter.
Angela Taylor, a Baird spokesperson, said the firm was disappointed with the findings, but pleased to have resolved the case. “We have made enhancements to our compliance procedures in recent years related to this issue,” she added.
At 10:05 a.m. in New York on Friday, Interactive Brokers shares were up 0.2%, Fifth Third advanced 1.2% and Perella Weinberg rose 1.1%.
Bond rating companies Kroll Bond Rating Agency and DBRS Ltd. also agreed to pay SEC fines for their use of unmonitored communications Friday. DBRS declined to comment, while a representative for Kroll didn’t immediately respond to a request for one.
What began as scrutiny of trading desks’ use of chat apps has expanded to include all of finance’s use of any communication tool that doesn’t save records appropriately. Hedge funds and private equity firms are also under investigation for their use of personal communication apps.
Though dozens of firms have agreed to settle, Citadel is preparing to push back if the SEC proceeds with an enforcement action against the hedge fund giant, Bloomberg News has reported.
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
