SEC Hits 16 Firms with $81M Fine Over ‘Pervasive and Longstanding’ Record-Keeping Violations

Seven dually registered broker-dealers and investment advisers, five broker-dealers, and four affiliated investment advisers agreed to pay a total of $81 million in fines to resolve U.S. Securities and Exchange Commission (SEC) allegations that they failed to maintain and preserve electronic communications.

Source: Advisen | Published on February 12, 2024

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Seven dually registered broker-dealers and investment advisers, five broker-dealers, and four affiliated investment advisers agreed to pay a total of $81 million in fines to resolve U.S. Securities and Exchange Commission (SEC) allegations that they failed to maintain and preserve electronic communications.

An investigation conducted by the regulator found that employees of the firms communicated using off-channel communications through personal text messages about the business of their employers then failed to preserve such communication. The firms admitted to violating federal securities laws.

Northwestern Mutual Investment Services LLC, together with Northwestern Mutual Investment Management Co. LLC and Mason Street Advisors LLC (collectively, Northwestern Mutual), agreed to pay $16.5 million in penalties.

Guggenheim Securities LLC, together with Guggenheim Partners Investment Management LLC  (collectively, Guggenheim), agreed to pay $15 million, while Oppenheimer & Co. Inc. agreed to pay a $12 million penalty.

Cambridge Investment Research Inc. and Cambridge Investment Research Advisors Inc.  (collectively, Cambridge), was ordered to pay $10 million.

The SEC also imposed a $10 million penalty against Key Investment Services LLC, together with KeyBanc Capital Markets Inc. (collectively, Key).

Lincoln Financial Advisors Corporation, together with Lincoln Financial Securities Corporation (collectively, Lincoln), was required to pay $8.5 million in penalties, while U.S. Bancorp Investments Inc. agreed to pay $8 million.

Since the Huntington group, composed of Huntington Investment Company, Huntington Securities Inc. and Capstone Capital Markets LLC, self-reported its violations, it was ordered to pay the lowest penalty worth $1.25 million.

“Today’s actions against these 16 firms result from our continuing efforts to ensure that all regulated entities comply with the recordkeeping requirements, which are essential to our ability to monitor and enforce compliance with the federal securities laws,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

In addition to paying the fines, the firms were required to implement improvements to their compliance policies and procedures.

 

 

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