SEC Enforcement Actions Target Broker-Dealers And Advisers For Communication Lapses

The Securities and Exchange Commission (SEC) has filed a lawsuit against 16 financial advisers and broker-dealers including top players like Oppenheimer and Guggenheim. These companies Bear the repercussions of refusing to maintain electronic communications, leading to combined civil penalties of over $81 million.

SEC Wants To Ensure Compliance with the Recordkeeping Requirements

The investigations carried out by the SEC revealed a practice of utilizing unapproved communication techniques referred to as off-channel communications throughout all 16 companies, as stated by the regulator.

This comprises personal text messages that talk about off-channel communications and business matters concerning investment advice and recommendations. These companies allegedly failed to maintain the authorized communication channel, breaking federal securities regulations.

The manager of SEC’s Division of Enforcement, Gurbir Grewal stated that these actions against these companies underscore their dedication to ensuring that all regulated businesses adhere to the recordkeeping requirements. He added that these requirements are important to the SEC’s capacity to supervise and enforce adherence to the federal securities regulations.

Due to these valuations, every company owned up to the facts specified in their respective SEC’s orders and decided to pay huge civil penalties. Huntington faces a penalty of $1.25 million, U.S. Bancorp $8 million, Lincoln $8.5 million, Key $10 million, Cambridge $10 million, Oppenheimer $12 million, Guggenheim $15 million, and Northwestern Mutual $16.5 million.

The SEC accused each company of violating provisions on recordkeeping and failing to detect and prevent these violations. The lapses involved staff at different levels, including senior managers and supervisors. Apart from financial penalties, the companies were faulted and ordered to cease further violations.

Sec Imposes Fines And Compliance Orders In Recordkeeping Crackdown

Furthermore, the firms were ordered to manage independent compliance consultants to execute thorough assessments of their procedures and policies. Moreover, these procedures and policies focus on the preservation of electronic communications discovered on personal devices.

In the previous year, the SEC fined financial companies $76 million for suspected breaks in recordkeeping. This restriction unfolds a pattern of insufficient electronic communication attempts among investment advisers and broker-dealers.

The SEC’s enforcement measures targeted two affiliated investment advisory companies, three entities registered as both investment advisers and broker-dealers, and five broker-dealers. In addition to the hefty financial penalties, the regulatory bodies mandated that each accused company cease any further violation of provisions in recordkeeping.

The SEC is the primary regulatory authority of the Nigerian capital market, managed by the Federal Ministry of Finance. The Nigerian Stock Exchange (NSE) is a self-regulated and privately owned firm, but the SEC monitors it to ensure fair and orderly securities and safeguard against insider trading abuses.