SEC fines 26 financial institutions $390 million for record-keeping violations
The U.S. Securities and Exchange Commission (SEC) announced fines totaling $390 million against 26 financial services companies for violating federal record-keeping regulations by failing to properly maintain and preserve electronic communications over an extended period. The fined companies include Ameriprise Financial Services, Edward D. Jones, Raymond James, and others. SEC Enforcement Director Gurbir Grewal emphasized that such violations impede investigations and reiterated the importance of record-keeping requirements. Some companies received lighter penalties for proactive self-reporting.
Core Summary
- The U.S. Securities and Exchange Commission (SEC) fined 26 financial services firms a total of $390 million for violating federal record-keeping regulations.
- Ameriprise Financial Services, Edward D. Jones, Raymond James, and other firms admitted to the facts described in the SEC's orders, which noted "widespread and longstanding failures to maintain and preserve electronic communications records" at these companies.
- The SEC investigation found that the use of "off-channel communications" was also routine at the supervisor and senior manager levels, and unarchived messages hindered thorough investigations.
In-Depth Analysis
SEC Enforcement Director Gurbir Grewal has repeatedly criticized multiple financial services firms over the past few months for deficiencies or gaps in their record-keeping practices.
In September 2023, the SEC brought record-keeping violation charges against ten firms, including Robert W. Baird & Co., William Blair & Company, and Nuveen Securities, with combined fines of $79 million. Among them, Interactive Brokers Corp. agreed to pay a $35 million penalty.
The previous month, the SEC charged 11 Wall Street firms, including BNP Paribas Securities, with failing to maintain electronic communications records, with total fines reaching $289 million. Wells Fargo Securities agreed to pay a $125 million penalty.
When announcing these penalties a year ago, Grewal stated that the SEC had brought 30 similar enforcement actions to date, with cumulative fines exceeding $1.5 billion.
"We remain committed to ensuring compliance with the books and records requirements of the federal securities laws, which are essential to investor protection and the effective functioning of markets," Grewal said.
Financial services firms that proactively report record-keeping deficiencies to the SEC may face lighter penalties.
Among the firms penalized this month, "several stood out by self-reporting before employee investigations, once again demonstrating the tangible benefits of proactive cooperation," Grewal said.
Separately, the Commodity Futures Trading Commission (CFTC) on Wednesday charged registered swap dealer TD Bank with failing to effectively supervise its electronic communications monitoring systems over a five-year period. TD Bank agreed to pay a $4 million penalty.