RECORDKEEPING AND SUPERVISION FAILURES SWEEP CONTINUES
The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) order multiple financial institutions to pay penalties totaling $549 million today
The recordkeeping and supervision failures story continues today, with the SEC charging 11 Wall Street firms with penalties totaling $289 million and the CFTC ordering four large financial institutions to pay $260 million separately. What began in December of 2021 with a major US financial institution paying $200 million for similar violations was followed by 16 Wall Street firms admitting wrongdoing and agreeing to pay more than $1.1 billion in penalties in September 2022. Less than one year later, the next round of investigations and fines were outlined today in the SEC and CFTC press releases, bringing the total penalties for these investigations thus far to well over $2.5 billion.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement: “So here are three takeaways for those firms who haven’t yet done so: self-report, cooperate and remediate. If you adopt that playbook, you’ll have a better outcome than if you wait for us to come calling.”
Pervasive and longstanding “off-channel” communications on personal mobile devices
The SEC’s press release states that the investigation uncovered pervasive and longstanding “off-channel” communications at all the firms. The SEC discovered that employees often communicated on their personal mobile devices through various messaging platforms about business related matters.
Failed to maintain and preserve off-channel communications
The firms did not maintain or preserve the substantial majority of these off-channel communications, violating federal securities laws. By failing to maintain and preserve these off-channel communications on personal devices, the firms violated federal securities laws and likely deprived the SEC and CFTC of these off-channel communications in various investigations. The failures involved employees at multiple levels of authority, including supervisors and senior executives.
Spend 15 minutes with one of our solutions engineers to explore how CellTrust SL2 mobile compliance capture solution for employees’ personal devices can help your organization meet SEC and CFTC recordkeeping and supervision compliance requirements.