SEC fines 26 firms a combined $390M for recordkeeping failures

Some of the biggest names in wealth management are among more than two dozen to pay millions of dollars in penalties for violations of recordkeeping requirements.

The Securities and Exchange Commission says that 26 firms – including broker-dealers, investment advisors, and dually-registered broker-dealers and investment advisors - will pay a combined $392.75 million for widespread failures relating to electronic communications.

Firms and their personnel were found to have failed to maintain and preserve records over long periods, violating certain recordkeeping provisions of the Securities Exchange Act, the Investment Advisers Act, or both.

The records that should be kept relating to the use of off-channel communications are important to the SEC’s investigations, but the firms were charged with failing to reasonably supervise their personnel with a view to preventing and detecting the violations. There were personnel of multiple levels of authority, including supervisors and senior managers who were found to have failed in their duty.

“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 well-functioning markets,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. “Among this group of firms, there are several that differentiated themselves by self-reporting prior to the staff’s investigation, demonstrating once again the real benefits of proactive cooperation.”

Three firms that took a proactive approach by self-reporting the violations will pay significantly lower financial penalties than they otherwise would. All firms have been ordered to cease and desist from future violations of the relevant recordkeeping provisions and were censured.

The firms and penalties are:

• Ameriprise Financial Services, LLC agreed to pay a $50 million penalty
• Edward D. Jones & Co., L.P. agreed to pay a $50 million penalty
• LPL Financial LLC agreed to pay a $50 million penalty
• Raymond James & Associates, Inc. agreed to pay a $50 million penalty
• RBC Capital Markets, LLC agreed to pay a $45 million penalty
• BNY Mellon Securities Corporation, together with Pershing LLC, agreed to pay a $40 million penalty
• TD Securities (USA) LLC, together with TD Private Client Wealth LLC and Epoch Investment Partners, Inc., agreed to pay a $30 million penalty
• Osaic Services, Inc., together with Osaic Wealth, Inc., agreed to pay an $18 million penalty
• Cowen and Company, LLC, together with Cowen Investment Management LLC, agreed to pay a $16.5 million penalty
• Piper Sandler & Co. agreed to pay a $14 million penalty
• First Trust Portfolios L.P. agreed to pay an $8 million penalty
• Apex Clearing Corporation agreed to pay a $6 million penalty
• Truist Securities, Inc., together with Truist Investment Services, Inc. and Truist Advisory Services, Inc., which self-reported, agreed to pay a $5.5 million penalty
• Cetera Advisor Networks LLC, together with Cetera Investment Services LLC, which self-reported, agreed to pay a $4.5 million penalty
• Great Point Capital, LLC agreed to pay a $2 million penalty
• Hilltop Securities Inc., which self-reported, agreed to pay a $1.6 million penalty
• P. Schoenfeld Asset Management LP agreed to pay a $1.25 million penalty
• Haitong International Securities (USA) Inc. agreed to pay a $400,000 penalty

Separately, the Commodity Futures Trading Commission announced settlements with The Toronto Dominion Bank, Cowen and Company, and Truist Bank for related conduct.