Twenty-six broker-dealer and investment advisory firms agreed to pay more than $390 million to settle Securities and Exchange Commission charges over failure to maintain and preserve electronic communications.
The firms acknowledged that their conduct violated record-keeping provisions of the federal securities laws, agreed to pay combined civil penalties of $393 million, and have begun implementing improvements to their compliance policies and procedures to address these violations, the SEC said in an Aug. 14 news release.
The SEC uncovered pervasive and longstanding use of unapproved communication methods, known as off-channel communications, at these firms. Their personnel sent and received off-channel communications that were records required to be maintained under securities laws, the SEC said.
The firms were each charged with violating certain record-keeping provisions of the Securities Exchange Act, the Investment Advisers Act, or both, the SEC said. Moreover, the firms were also each charged with failing to reasonably supervise their personnel with a view to preventing and detecting those violations, the agency noted.
“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,” said Gurbir S. Grewal, director of the SEC’s enforcement division, in the news release.
The list of firms and their respective settlement totals are:
- Ameriprise Financial Services agreed to pay a $50 million penalty.
- Edward D. Jones & Co. agreed to pay a $50 million penalty.
- LPL Financial agreed to pay a $50 million penalty.
- Raymond James & Associates agreed to pay a $50 million penalty.
- RBC Capital Markets agreed to pay a $45 million penalty.
- BNY Mellon Securities Corp., together with Pershing, agreed to pay a $40 million penalty.
- TD Securities (USA), together with TD Private Client Wealth and Epoch Investment Partners, agreed to pay a $30 million penalty.
- Osaic Services, together with Osaic Wealth, agreed to pay an $18 million penalty.
- Cowen and Co., together with Cowen Investment Management, agreed to pay a $16.5 million penalty.
- Piper Sandler & Co. agreed to pay a $14 million penalty.
- First Trust Portfolios L.P. agreed to pay an $8 million penalty.
- Apex Clearing Corp. agreed to pay a $6 million penalty.
- Truist Securities, together with Truist Investment Services and Truist Advisory Services, which self-reported, agreed to pay a $5.5 million penalty.
- Cetera Advisor Networks, together with Cetera Investment Services, which self-reported, agreed to pay a $4.5 million penalty.
- Great Point Capital agreed to pay a $2 million penalty.
- Hilltop Securities, which self-reported, agreed to pay a $1.6 million penalty.
- P. Schoenfeld Asset Management LP agreed to pay a $1.25 million penalty.
- Haitong International Securities (USA) agreed to pay a $400,000 penalty.
A spokesperson for LPL Financial said in an email: “We cooperated with the SEC’s investigation and have taken proactive steps to enhance our record-keeping compliance procedures to meet regulatory requirements and the needs of our clients.”
An Edward Jones spokesperson said in an email that the firm “cooperated fully with the SEC and are pleased to have resolved this matter. We take this very seriously and have made and will continue to make enhancements to our policies, procedures and practices.”
And a BNY Pershing spokesperson said in an email that the firm “takes its regulatory responsibilities seriously and is pleased to have resolved this matter.”
The other firms that settled charges either had no comment or did not immediately respond to a request for comment.
