Piper Sandler agrees to pay $16m in civil penalties as part of its settlement with the SEC and CFTC

Piper Sandler, an investment banking company, recently agreed to pay $16 million in civil penalties. The fine is part of the firm’s settlement with the US regulators who investigated its record-keeping practices. The settlement was announced yesterday, August 6, and it marks the latest development in a broader regulatory crackdown on communication compliance among Wall Street companies.

Piper Sandler reaches a settlement with the regulators

According to the details of the settlement Piper Sandler, headquartered in Minneapolis, has agreed to pay $14 million to the US Securities and Exchange Commission (SEC) and another $2 million to the Commodity Futures Trading Commission (CFTC).

The fines came after the regulators probed into the firm’s unapproved business-related communications conduct on messaging platforms. The firm said that it has reached agreements in principle with the staff of the two regulatory bodies to resolve investigations regarding compliance with recordkeeping requirements.

Furthermore, the information about the settlement also appeared in the bank’s latest revenue report for Q2 2024. The reports showed that the firm’s revenues reached $340 million, going up from the previous year’s $290 million. As a result, the company’s net profit also went up to $14.9 million, while earnings per common share jumped to $2.19 in Q2 2024, compared to $0.26 in Q2 2023.

Regulators continue to crack down on financial firms

The regulators’ action against Piper Sandler is only the latest development in a multi-year initiative to scrutinize how financial institutions document and preserve employee communications. The initiative, led by the SEC, particularly focused on this aspect after countless businesses had to shift to remote work due to the COVID-19 pandemic.

According to the standing rules and regulations, banks and investment companies must maintain comprehensive records of staff communications. Meanwhile, they must prohibit the use of unapproved communication methods for work-related matters, including personal emails, texts, or messaging apps.

Since 2021, the US SEC imposed numerous fines which totaled in over $1.7 billion in compliance failures similar to that of Piper Sandler. Even major banks like JPMorgan Chase or Wells Fargo have been fined for similar breaches.

In fact, JPMorgan received a particularly large penalty that amounted to almost $350 million. However, after deeper investigation, it turned out that the alleged misconduct has nothing to do with the shift to remote work caused by the pandemic, as it occurred over nearly a full decade, starting in 2014 and lasting until 2023.

Meanwhile, the CFTC also reached a major and historically significant settlement last month. It involved FTX, a bankrupt crypto exchange founded by Sam Bankman-Fried. The settlement concluded a legal dispute that lasted for more than a year and a half, since the exchange’s bankruptcy in November 2022. The settlement includes $8.7 billion in restitution and $4 billion in disgorgement.