In line with this first-of-its-kind group resolution and our December 2021 settlement with J.P. “The time is now to bolster your record retention processes and to fix issues that could result in similar future misconduct by firm personnel. “These actions deliver a straightforward message to registrants: You are expected to abide by the Commission’s recordkeeping rules,” said Sanjay Wadhwa, Deputy Director of Enforcement. Other broker dealers and asset managers who are subject to similar requirements under the federal securities laws would be well-served to self-report and self-remediate any deficiencies.” “These 16 firms not only have admitted the facts and acknowledged that their conduct violated these very important requirements, but have also started to implement measures to prevent future violations. Grewal, Director of the SEC’s Division of Enforcement. If there are allegations of wrongdoing or misconduct, we must be able to examine a firm’s books and records to determine what happened,” said Gurbir S. “Today’s actions – both in terms of the firms involved and the size of the penalties ordered – underscore the importance of recordkeeping requirements: they’re sacrosanct. The failings occurred across all of the 16 firms and involved employees at multiple levels of authority, including supervisors and senior executives. By failing to maintain and preserve required records relating to their businesses, the firms’ actions likely deprived the Commission of these off-channel communications in various Commission investigations. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws. These personnel included senior and junior investment bankers and debt and equity traders.įrom January 2018 through September 2021, the firms’ employees routinely communicated about business matters using text messaging applications on their personal devices. The firms cooperated with the investigation by gathering communications from the personal devices of a sample of the firms’ personnel. The SEC staff’s investigation uncovered pervasive off-channel communications. As part of our examinations and enforcement work, we will continue to ensure compliance with these laws.” As technology changes, it’s even more important that registrants appropriately conduct their communications about business matters within only official channels, and they must maintain and preserve those communications. “Since the 1930s, such recordkeeping has been vital to preserve market integrity. By failing to honor their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust,” said SEC Chair Gary Gensler. The following two firms have agreed to pay penalties of $50 million each:.UBS Securities LLC together with UBS Financial Services Inc.LLC together with Morgan Stanley Smith Barney LLC and and DWS Investment Management Americas, Inc. together with Merrill Lynch, Pierce, Fenner & Smith Inc. The following eight firms (and five affiliates) have agreed to pay penalties of $125 million each:.The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined penalties of more than $1.1 billion, and have begun implementing improvements to their compliance policies and procedures to settle these matters. The Securities and Exchange Commission today announced charges against 15 broker-dealers and one affiliated investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications.
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