SEC Slams LPL, Raymond James & 24 Other Firms With $393M in Off-Channel Messaging Fines
Ameriprise, Edward Jones and Osaic were also fined for failing to retain messages sent on unauthorized channels, like WhatsApp.
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
See: 16 Biggest Fines in SEC’s Texting Crackdown
“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.
The failures involved personnel at multiple levels of authority, including supervisors and senior managers, according to the SEC.
The firms were each charged with violating certain recordkeeping provisions of the Securities Exchange Act, the Investment Advisers Act or both. They were also each charged with failing to reasonably supervise their personnel with a view to preventing and detecting those violations.
In addition to the significant financial penalties, each of the firms was ordered to cease and desist from future violations of the relevant recordkeeping provisions and was censured.
“We cooperated with the SEC’s investigation and have taken proactive steps to enhance our recordkeeping compliance procedures to meet regulatory requirements and the needs of our clients,” LPL said late Wednesday in a statement.
Separately, the Commodity Futures Trading Commission announced settlements with The Toronto Dominion Bank, Cowen and Company, and Truist Bank for related conduct.
The SEC has levied more than $3 billion in fines to date in its off-channel communications sweep.
Related Cambridge, Northwestern Mutual Among 16 Firms Hit With Texting Fines
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