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