A new group of Wall Street firms has agreed to pay more than $81 million in civil penalties to resolve Securities and Exchange Commission charges that they failed to meet record-keeping obligations, regulators announced Friday.
Settlements with broker-dealers and investment advisers such as Oppenheimer and U.S. Bancorp are part of an SEC investigation into how registered financial firms handle employees’ work-related communications on personal devices and apps such as WhatsApp. This is the latest in a multi-year effort. .
“The SEC’s investigation revealed widespread and prolonged use of unauthorized communication methods known as off-channel communications,” the agency said in a statement.
The SEC states that the two companies do not allow employees to “communicate through personal text messages about the employer’s business” and “receive any suggestions made or to be made, and any advice given or proposed to be given.” He admitted to sending and receiving related off-channel communications.
Since 2021, the SEC has fined dozens of companies $1.7 billion for these compliance violations, including major banks such as JPMorgan Chase and Wells Fargo.
Broker-dealers and investment advisors registered with the SEC are subject to record-keeping requirements.
The increasing use of off-channel communications complicates companies’ efforts to meet these requirements.
Northwestern Mutual Investment Services Company agreed to pay $16.5 million. Guggenheim agreed to pay $15 million. Oppenheimer will be paid $12 million. Cambridge Investment Research and KeyBank Entities will each pay $10 million. Lincoln Financial Advisors will pay $8.5 million. Pursuant to the SEC’s order, U.S. Bancorp agreed to pay $8 million.
Huntington Investment Company companies will pay $1.25 million after self-reporting the problem, according to the SEC.
Both companies acknowledged the facts and began improving their compliance policies and procedures, regulators said.
A lawyer for Guggenheim declined to comment.
Lawyers for the other companies did not respond to requests for comment.
