More than two dozen financial firms have agreed to pay a combined $392.75 million in civil penalties to settle Securities and Exchange Commission charges over "widespread and longstanding failures" to maintain records related to off-channel communications, the SEC announced Wednesday.
The commission announced charges against 26 broker-dealers, RIAs and dually registered broker-dealers, which admitted the facts set forth in their respective SEC orders, acknowledged their conduct violated federal securities laws and agreed to pay the civil penalties.
The probe focused on firms' failure to keep records on communications sent through texting and unauthorized messaging apps, such as WhatsApp.
The firms have started implementing improvements to their compliance policies and procedures to address the violations, the SEC said. Three firms self-reported their violations and therefore will pay significantly lower civil penalties than they would have otherwise.
The following firms have agreed to pay penalties:
- Ameriprise Financial Services LLC, $50 million
- Edward D. Jones & Co. L.P., $50 million
- LPL Financial LLC, $50 million
- Raymond James & Associates Inc., $50 million
- RBC Capital Markets LLC, $45 million
- BNY Mellon Securities Corp., together with Pershing LLC, $40 million
- TD Securities (USA) LLC, together with TD Private Client Wealth LLC and Epoch Investment Partners Inc., $30 million
- Osaic Services Inc., together with Osaic Wealth Inc., $18 million
- Cowen and Co., together with Cowen Investment Management, $16.5 million
- Piper Sandler & Co., $14 million
- First Trust Portfolios L.P., $8 million
- Apex Clearing Corp., $6 million
- Truist Securities Inc., together with Truist Investment Services and Truist Advisory Services, which self-reported, $5.5 million penalty
- Cetera Advisor Networks LLC, together with Cetera Investment Services LLC, which self-reported, $4.5 million
- Great Point Capital LLC, $2 million
- Hilltop Securities Inc., which self-reported, $1.6 million
- P. Schoenfeld Asset Management LP, $1.25 million
- Haitong International Securities (USA) Inc., $400,000
"As today's enforcement actions against more than two dozen firms reflect, 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.
"Among this group of firms, there are several that differentiated themselves by self-reporting prior to the staff's investigation, demonstrating once again the real benefits of proactive cooperation," Grewal added.
Each of the SEC's investigations uncovered "pervasive and longstanding use of unapproved communication methods," known as off-channel communications, at these firms.
The firms admitted that, during the relevant periods, their personnel sent and received off-channel communications that were records required to be maintained under the securities laws to aid the SEC in investigations, the agency said.
