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SEC Takes Action Against 11 Wall Street Firms for Record-keeping Violations

Posted on August 18th, 2023 at 11:31 AM
SEC Takes Action Against 11 Wall Street Firms for Record-keeping Violations

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï 

The Securities and Exchange Commission (SEC) has charged 11 firms with significant and longstanding failures to uphold electronic communication preservation regulations.

The firms have accepted the allegations detailed in their respective SEC orders and acknowledged their violation of recordkeeping provisions under federal securities laws. In response, they have committed to paying $289 million in penalties while initiating enhancements to their compliance policies and procedures to rectify these breaches. The firms have agreed to pay combined penalties as outlined below.

  • ÍøÆØ³Ô¹Ïlls Fargo Securities, LLC, together with ÍøÆØ³Ô¹Ïlls Fargo Clearing Services, LLC
    and ÍøÆØ³Ô¹Ïlls Fargo Advisors Financial Network, LLC, agreed to pay a $125 million
    penalty
  • BNP Paribas Securities Corp. and SG Americas Securities, LLC have each agreed
    to pay penalties of $35 million
  • BMO Capital Markets Corp. and Mizuho Securities USA LLC have each agreed to
    pay penalties of $25 million
  • Houlihan Lokey Capital, Inc. has agreed to pay a $15 million penalty
  • Moelis & Company LLC and ÍøÆØ³Ô¹Ïdbush Securities Inc. have each agreed to pay
    penalties of $10 million
  • SMBC Nikko Securities America, Inc. has agreed to pay a $9 million penalty

The SEC's investigation unveiled persistent and long-established instances of "off- channel" communications across all 11 firms. According to the SEC, the firms admitted that their employees frequently utilized personal messaging platforms on devices like iMessage, WhatsApp, and Signal to discuss their employers' business activities since at least 2019. Most of these communications were not maintained or preserved, infringing upon federal securities laws. Consequently, some of these firms likely hindered the Commission's access to these off-channel communications during various SEC inquiries. These failures extended across different levels of personnel, including supervisors and senior executives.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

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