Published on Aug 16th, 2024 |

26 Firms Fined $392 Million | Recordkeeping Failures

SEC Releases

Introduction

On August 14th, 2024, nearly $400 million in charges were filed against twenty-six (26) Firms by the SEC for widespread recordkeeping failures.

Recordkeeping failures have continued to be a top priority for the SEC. With approximately a billion dollars of related charges in 2022, and hundreds of millions in 2023, the SEC continues to investigate and fine Firms that have not implemented proper recordkeeping practices.

What Happened?

What Happened?

  • 26 Investment Advisers, Broker Dealers and Dually Registered Broker Dealer/Investment Advisers were hit with a combined $392.75 million in fines.
    • Individual penalties ranged from $400,000 to $50 million, with Firms that self-reported receiving a significantly reduced penalty.
  • The SEC reports that uncovered “pervasive and longstanding use of unapproved communication methods” had occurred involving multiple levels of personnel throughout the Firms.
  • Senior Leadership in these Firms did not properly supervise their personnel to prevent off-channel communication, and in some instances Senior Leadership was also engaged in off-channel communication.

Key Takeaways

Key Takeaways

  • Firms need to archive all business communications in a way that provides easy access for SEC Examinations.
  • Recordkeeping failures will continue to incur large fines from the SEC.
  • Procedures should be in place to ensure that the line is not blurred between business and personal communications when employees are using the same device for personal and business use.
  • Self-reporting and self-remediation increases the likelihood of a reduced (or no) financial penalty.

Vigilant's Conclusion

Vigilant’s Conclusion

Do not create costly regulatory headaches for your Firm by failing to take the necessary steps to be compliant.

Vigilant is prepared to assist Firms looking to improve their compliance policies and procedures to maintain compliance with the recordkeeping requirements. We offer Cost Effective Compliance Solutions that includes a gap analysis of current policies, procedures, and more.

Please reach out to us today with any concerns you may have, so that we can help you focus on your business goals while we focus on reducing your compliance risk.

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