SEC Charges 16 Financial Advisory Firms Over Recordkeeping Failures

Posted on October 17th, 2022 at 1:20 PM
SEC Charges 16 Financial Advisory Firms Over Recordkeeping Failures

From the Desk of Jim Eccleston at Eccleston Law.

The Securities and Exchange Commission (SEC) has charged 16 financial advisory firms over widespread failures by the firms and their employees to preserve electronic communications.

Each firm has acknowledged that their conduct violated recordkeeping rules and have agreed to pay a combined $1.1 billion in penalties. Barclays Capital, Bank of America Securities, Citigroup, Credit Suisse, Deutsche Bank Securities, Goldman Sachs, Morgan Stanley, and UBS have each agreed to pay penalties of $125 million. Furthermore, Jefferies LLC and Nomura Securities have each agreed to pay a $50 million penalty. Finally, Cantor Fitzgerald has agreed to pay a $10 million penalty. The firms cooperated with the SEC’s investigation by collecting communications from personal devices of a sample of the firm’s employees, including senior and junior investment bankers and equity traders.

According to the SEC, each of the firms’ employees regularly discussed business matters via test messaging applications on their personal devices between January 2018 and September 2021. Each of the firms violated federal securities laws by failing to preserve a substantial majority of these communications. The failure to preserve off-channel communications occurred across all 16 firms and included employees at several levels of authority, such as supervisors and senior executives.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, law, sec

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