Another twenty-six firms fined over $390 Million collectively for widespread recordkeeping failures
On August 14, the US Securities and Exchange Commission (SEC), fined another twenty-six firms more than $390 Million combined for widespread recordkeeping failures
SEC investigators continue to uncover longstanding use of unapproved, off-channel communications within the financial services sector with widespread recordkeeping failures.
The SEC found that staff at the firms sent and received communications requiring recordkeeping (capture, archive and retention) and supervision under securities laws. The failure to maintain and preserve the required records deprived the SEC the ability to investigate the communications (eDiscovery).
The firms were also each charged with failing to reasonably supervise their personnel with a view to preventing and detecting those violations.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement:
“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.”
In addition to the significant financial penalties, each of the firms was ordered to cease and desist from future violations of the relevant recordkeeping provisions and was censured.
Three of the firms self-reported their violations and, as a result, will pay significantly lower civil penalties than they would have otherwise.
“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.”
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