Updated February 10th, 2024 at 13:16 IST
SEC imposes $81 million in fines on Wall Street firms for record-keeping lapses
This latest enforcement action builds upon the SEC's efforts since 2021, during which it has imposed fines totalling $1.7 billion on numerous firms.
The US Securities and Exchange Commission (SEC) has announced a fresh round of penalties totalling over $81 million against a group of Wall Street firms. The fines came after alleged record-keeping failures related to employees' use of personal devices and applications for work-related communications.
Among the firms implicated in the settlements are Oppenheimer & Co. Inc and US Bancorp, marking the latest development in the SEC's ongoing initiative to scrutinise how registered financial entities manage employees' communications conducted on non-approved channels, such as WhatsApp.
According to the SEC, its investigations revealed widespread and persistent use of unapproved communication methods, commonly referred to as "off-channel communications," by employees of the implicated firms. The agency stated that employees engaged in business-related discussions via personal text messages and exchanged off-channel communications regarding recommendations and advice.
This latest enforcement action builds upon the SEC's efforts since 2021, during which it has imposed fines totalling $1.7 billion on numerous firms, including major banks like JPMorgan Chase & Co and Wells Fargo & Co, for similar compliance shortcomings. Broker-dealers and investment advisers registered with the SEC are required to adhere to strict record-keeping standards, but the proliferation of off-channel communications has presented challenges for companies striving to meet these requirements.
The firms facing penalties in the latest round of enforcement actions include Northwestern Mutual Investment Services, Guggenheim, Cambridge Investment Research, Keybank, Lincoln Financial Advisors, and Huntington Investment Company. Each firm has agreed to pay fines ranging from $1.25 million to $16.5 million, with amounts determined based on the severity of the violations.
In response to the SEC's findings, the implicated firms have acknowledged the facts and have committed to enhancing their compliance policies and procedures to prevent similar infractions in the future.
The SEC's crackdown underscores the importance of robust record-keeping practices and regulatory compliance within the financial industry, as authorities remain vigilant in their efforts to uphold integrity and transparency in the marketplace.
(With Reuters inputs)
Published February 10th, 2024 at 13:16 IST