The Securities and Exchange Commission has charged 26 financial firms, including broker-dealers and investment advisers, for failing to maintain and preserve electronic communications, a violation of federal securities laws. These firms collectively agreed to pay $392.75 million in civil penalties and have committed to enhancing their compliance procedures.
The SEC said the firms admitted the facts in their respective orders, acknowledged that their conduct violated recordkeeping provisions of federal securities laws and agreed to make improvements.
The firms involved include major industry players such as Ameriprise Financial Services, Edward Jones, LPL Financial, and Raymond James, each of whom will pay $50 million. RBC Capital Markets, BNY Mellon Securities, and TD Securities are also among those penalized, with fines ranging from $30 million to $45 million.
Unapproved Communications
The SEC’s investigation revealed widespread use of unapproved communication methods, referred to as “off-channel communications,” by personnel at various levels within these firms. These methods circumvented required recordkeeping processes, depriving the SEC of critical information during its investigations, the agency said. The violations were found to involve supervisors and senior managers, leading to charges of inadequate supervision in addition to recordkeeping failures.
Three firms — Truist Securities, Cetera Advisor Networks, and Hilltop Securities — self-reported their violations, resulting in significantly lower penalties. For example, Truist Securities agreed to pay $5.5 million, while Cetera Advisor Networks and Hilltop Securities will pay $4.5 million and $1.6 million, respectively.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the importance of compliance with recordkeeping regulations, highlighting the benefits of proactive cooperation as demonstrated by the self-reporting firms.
Firm List
The full list of firms and their fines include:
Ameriprise Financial Services, LLC agreed to pay a $50 million penalty.
Edward D. Jones & Co., L.P. agreed to pay a $50 million penalty.
LPL Financial LLC agreed to pay a $50 million penalt.y
Raymond James & Associates, Inc. agreed to pay a $50 million penalty.
RBC Capital Markets, LLC agreed to pay a $45 million penalty.
BNY Mellon Securities Corporation, together with Pershing LLC, agreed to pay a $40 million penalty.
TD Securities (USA) LLC, together with TD Private Client Wealth LLC and Epoch Investment Partners, Inc., agreed to pay a $30 million penalty.
Osaic Services, Inc., together with Osaic Wealth, Inc., agreed to pay an $18 million penalty.
Cowen and Company, LLC, together with Cowen Investment Management LLC, 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 Corporation agreed to pay a $6 million penalty.
Truist Securities, Inc., together with Truist Investment Services, Inc. and Truist Advisory Services, Inc., which self-reported, agreed to pay a $5.5 million penalty.
Cetera Advisor Networks LLC, together with Cetera Investment Services LLC, which self-reported, agreed to pay a $4.5 million penalty.
Great Point Capital, LLC agreed to pay a $2 million penalty.
Hilltop Securities Inc., which self-reported, agreed to pay a $1.6 million penalty.
Schoenfeld Asset Management LP agreed to pay a $1.25 million penalty.
Haitong International Securities (USA) Inc. agreed to pay a $400,000 penalty.
