SEC Hits Stifel, Others With $88M in Texting Fines
Stifel and Invesco will each pay $35 million over off-channel communications.
The Securities and Exchange Commission continued its crackdown on texting and the use of unauthorized messaging apps Tuesday by ordering 11 firms to pay a combined $88 million for widespread and longstanding failures to maintain and preserve electronic communications.
The firms, which comprise broker-dealers, investment advisors and one dually registered firm, admitted the facts set forth in their respective SEC orders, acknowledged their conduct violated recordkeeping provisions of the federal securities laws and agreed to pay the combined civil penalties.
The firms agreed to pay civil penalties of $88.2 million, as follows:
- Stifel, Nicolaus & Co. Inc., $35 million
- Invesco Distributors Inc., together with Invesco Advisers Inc., $35 million
- CIBC World Markets Corp., together with CIBC Private Wealth Advisors, Inc., $12 million
- Glazer Capital LLC, $2 million
- Intesa Sanpaolo IMI Securities Corp., $1.5 million
- Canaccord Genuity LLC, $1.25 million
- Regions Securities LLC, $750,000
- Alpaca Securities LLC, $400,000
- Focused Wealth Management Inc., $325,000
- Qatalyst Partners LP will not pay a penalty.
“Today’s enforcement actions reflect the range of remedies that parties may face for violating the recordkeeping requirements of the federal securities laws,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “Widespread and longstanding failures, including where those failures potentially hinder the Commission’s investor protection function by compromising a firm’s response to SEC subpoenas, may result in robust civil penalties.”
On the other hand, Grewal continued, “firms that self-report and otherwise cooperate with the SEC’s investigations may receive significantly reduced penalties.”
Despite recordkeeping failures “that involved communications by senior leadership and persisted after our first recordkeeping matters were announced in 2021, Qatalyst took substantial steps to comply, self-reported, and remediated and, therefore, received a no-penalty resolution,” Grewal said.
Two additional firms, Canaccord and Regions, also self-reported their violations and, as a result, will pay significantly lower civil penalties than they would have otherwise, according to the SEC.
The SEC’s order against Focused Wealth also found that the firm failed to adopt and implement policies and procedures reasonably designed to prevent the firm and its supervised persons from violating recordkeeping requirements.
The SEC’s investigations into all the firms except for Qatalyst uncovered pervasive and longstanding use of unapproved communication methods, known as off-channel communications, at these firms, the agency said.
The failures involved personnel at multiple levels of authority, including supervisors and senior managers.
The SEC’s crackdown on texting and the use of unauthorized messaging apps has continued with 12 municipal advisors being charged more than $1.3 million in combined fines, as well as six nationally recognized statistical rating organizations agreeing to pay more than $49 million.
The SEC has levied more than $3 billion in fines to date in its off-channel communications sweep. On Aug. 14, the agency announced $393 million in fines against 26 firms including Edward Jones, LPL Financial and Raymond James.