SEC Charges 16 Wall Street Firms with Widespread Recordkeeping Failures
Recordkeeping provisions of the Securities Exchange Act of 1934
Recordkeeping provisions of the Investment Advisers of 1940
16 firms, Including Five Affiliates of the Large Banks
Why it Matters & To Whom it Applies
The large banks that admitted wrongdoing and settled with the regulator include Bank of America, Barclays, Citigroup, Goldman Sachs and Morgan Stanley. Each will pay $125 million to the S.E.C. The S.E.C. imposed fines totaling $1.1 billion on 16 firms, including five affiliates of the large banks. The Commodity Futures Trading Commission imposed an additional $710 million in fines on 11 financial firms, some of which were also charged by the S.E.C. The biggest banks agreed to each pay $75 million to the C.F.T.C.
The Securities and Exchange Commission today announced charges against 15 broker-dealers and one affiliated investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications. The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined penalties of more than $1.1 billion, and have begun implementing improvements to their compliance policies and procedures to settle these matters.
The SEC staff’s investigation uncovered pervasive off-channel communications. From January 2018 through September 2021, the firms’ employees routinely communicated about business matters using text messaging applications on their personal devices.