On September 29, 2023, the U.S. Securities and Exchange Commission (SEC) announced enforcement actions against five broker-dealers, three dually registered broker-dealers and investment advisers, and two affiliated investment advisers for what the SEC described as “widespread and longstanding failures to maintain and preserve electronic communications.” The enforcement actions, settled by each respondent, included fines ranging between $2.5 million to $35 million, as well as remedial actions like retention of an independent compliance consultant, mandatory reporting of any disciplinary actions, and review of employee communications as a regular internal audit item.
These settlements are the latest in the SEC’s sprawling investigation of its registrants’ use of off-network communications, which has included enforcement actions against 30 other firms over the past 24 months, and has been the subject of previous client updates here and here.
Key Takeaways
Continued scrutiny of investment advisers
The SEC’s ongoing aggressive enforcement of recordkeeping violations continues to focus on investment advisers, despite their trade associations’ contention in correspondence to the…
