Securities and Exchange Commission Announces Charges Against Financial Companies

The Securities and Exchange Commission (SEC) has recently charged 16 financial companies for their failure to adequately maintain and preserve electronic communications. These companies have collectively agreed to pay over $81 million in civil penalties.

According to the SEC, employees of these firms used unofficial communication channels, such as personal text messaging services, to discuss clients and business transactions instead of using the official platforms provided by the companies.

“We take these actions against the 16 firms as part of our ongoing efforts to ensure regulatory compliance with recordkeeping requirements. This compliance is crucial for us to effectively monitor and enforce adherence to federal securities laws,” commented Gurbir S. Grewal, the director of the SEC’s enforcement division.

The fined companies include:

  • U.S. Bancorp’s investment subsidiary: U.S. Bancorp. Investments Inc.
  • Oppenheimer & Co. Inc.
  • Three entities associated with Northwestern Mutual
  • Guggenheim Securities and Guggenheim Partners Investment Management LLC
  • Cambridge Investment Research Inc. and Cambridge Investment Research Advisors Inc.
  • Two subsidiaries of KeyCorp: Key Investment Services LLC and KeyBanc Capital Markets Inc.
  • Two subsidiaries of Lincoln National Corp.: Lincoln Financial Advisors Corp. and Lincoln Financial Securities Corp.
  • Three subsidiaries of Huntington Bank: the Huntington Investment Company, Huntington Securities Inc., and Capstone Capital Markets LLC

It is worth noting that Huntington Bank received a smaller penalty of $1.25 million due to its voluntary self-reporting and cooperation.

This action is part of the SEC’s ongoing efforts to prevent financial firms from using non-traditional communication channels that are not preserved in the standard record-keeping process. The SEC’s focus on record keeping is driven by its commitment to enforcing securities laws effectively.

The SEC’s comprehensive approach in promoting compliance underscores the importance of maintaining proper record-keeping practices within the financial industry.

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