US SEC fines firms over $81 million for record-keeping failures

By Thomson Reuters Feb 9, 2024 | 8:54 AM

WASHINGTON (Reuters) -The U.S. Securities and Exchange Commission on Friday said 16 firms will pay more than $81 million to settle charges for widespread recordkeeping failures.

The agency announced the civil penalties against five broker-dealers, seven dual registered broker-dealers and investment advisers, and four affiliated investment advisers.

The settlements are the latest in a multi-year push by the SEC to probe Wall Street’s recordkeeping practices. The agency has brought dozens of similar enforcement actions against financial firms.

The 16 firms admitted the facts and have begun improving compliance policies and procedures, the SEC said in a statement on Friday.

“The SEC’s investigations uncovered pervasive and longstanding uses of unapproved communication methods, known as off-channel communications, at all 16 firms,” the SEC statement said.

The firms admitted that employees “communicated through personal text messages about the business of their employers” and “sent and received off-channel communications related to recommendations made or proposed to be made and advice given or proposed to be given,” the SEC said.

The group includes Oppenheimer & Co. Inc and two Guggenheim entities as well as Northwestern Mutual Investment Services LLC, Cambridge Investment Research Inc., Key Investment Services LLC, Lincoln Financial Advisors Corporation, U.S. Bancorp Investments Inc. and The Huntington Investment Company, the SEC said.

Lawyers for the firms did not respond immediately to requests for comment.

(Reporting by Doina Chiacu; Editing by Susan Heavey, Barbara Lewis, Philippa Fletcher)