The SEC dished out fines to 26 advisory firms for failure to maintain current and accurate records of electronic communications, accumulating $392.75 million and leading firms to enhance their compliance procedures.
If we have said it once, we have said it a thousand times: the SEC is continuing to crack down on text message archiving and reviews, and they don’t seem to be slowing down anytime soon.
Debrief of Current SEC Fines
The SEC’s recent investigation uncovered ‘pervasive and longstanding use of unapproved communication methods, known as off-channel communications’ from personnel at all levels of authority and include broker-dealers, investment advisers, and dually-registered broker-dealers and investment advisers; as well as firm supervisors and senior managers.
Each of the 26 firms were charged with violating certain recordkeeping provisions of the Securities Exchange Act, the Investment Advisers Act, or both. In addition to these regulatory fines, the firms were charged with failing to reasonably supervise their personnel to prevent such violations.
Record keeping and supervisory requirements are essential to investor protection and preserving well-functioning markets; failure to comply deprives the SEC of critical information during its investigations and leads to increased fines in the long run.
It should be noted that of the 26 firms affected, three – Truist Securities, Cetera Advisor Networks, and Hilltop Securities – self-reported their violations and significantly decreased their penalties.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the importance of compliance with recordkeeping regulations, highlighting the benefits of proactive cooperation as demonstrated by the self-reporting firms.
A Simple Solution to Record-Keeping for the SEC
RIA Compliance Technology has developed simple compliance solutions, giving firms peace of mind when SEC regulators visit.
Our Simple solutions include: The Compliance Portal, Email and SMS Archive, Trade Monitor, and The Compliance Calendar.
These firms would have benefited from Simple Email Archive, specifically Simple Text Message Archive, to ensure proper communication archiving and timely review. Simplify your reporting process before the regulators make an appearance, visit RIA Compliance Technology.
