Sixteen Firms Settle SEC Charges for Widespread Recordkeeping Failures

Sixteen firms, including investment advisers as well as broker-dealers, settled SEC charges for failures by the firms and their employees to maintain and preserve electronic communications.

In multiple Orders, the SEC found that the firms used unapproved communication methods, including personal text messages and off-channel communications, that included investment recommendations. The SEC found that the firms did not maintain or preserve most of these off-channel communications. The SEC found that the failures involved employees at multiple levels of authority, including supervisors and senior managers.

The SEC determined that the firms violated recordkeeping provisions, including SEA Section 17(a)(1) ("Records and Reports") and Advisers Act Section 204 ("Reports by investment advisers").

The SEC imposed various penalties on the different firms, including: (i) cease-and-desist orders, (ii) censure and (iii) combined civil penalties of more than $81 million.