16 Firms Fined $81 Million in Latest SEC Electronic Communications Recordkeeping Settlements

The total fines imposed by the SEC and CFTC for violations associated with firms’ failure to monitor and capture communications by employees on unapproved devices and systems (off-channel communications) are approaching $3 billion. The SEC recently resolved enforcement proceedings involving off-channel communications against 12 broker-dealers and four affiliated investment advisers. The resolutions require the 16 respondents to pay more than $81 million aggregate in civil penalties and retain compliance consultants to review their electronic communications practices. As in prior resolutions of off-channel communications matters, the respondents all admitted the facts alleged by the SEC and acknowledged that they violated the federal securities laws. This article analyzes the latest round of settlements. See “SEC Penalizes JPMorgan for Deleting Electronic Communications” (Feb. 29, 2024); “Messaging Apps Come Under Increasing Regulatory Scrutiny” (Aug. 31, 2023); and “SEC and CFTC Continue to Penalize Firms for Electronic Communications Recordkeeping Violations” (Aug. 17, 2023).

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