SEC fines 16 Wall Street firms $1.1bn for recordkeeping failures


The US Securities and Exchange Commission (SEC) has filed charges against 16 Wall Street firms for “longstanding failures” to maintain electronic communications in violation of federal securities laws.

SEC fines 16 Wall Street $1.1bn firms for federal securities law violations

Between them, the 15 broker-dealers and one investment advisor have agreed to pay more than $1.1 billion in penalties for violating recordkeeping provisions of the Securities Exchange Act of 1934.

The SEC says that between January 2018 and September 2021, employees across all the firms routinely used messaging applications on their personal devices to discuss internal business matters.

The majority of these “pervasive off-channel communications” were not maintained or preserved, in violation of federal securities laws, the SEC alleges.

SEC chair Gary Gensler says recordkeeping and books-and-records obligations are “vital to preserve market integrity”.

“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,” Gensler adds.

Eight firms and five affiliates have each agreed to pay $125 million. They are: Barclays Capital, Bank of America Securities, Citigroup Global Markets, Credit Suisse Securities, Deutsche Bank Securities (as well as two affiliates), Goldman Sachs, Morgan Stanley (as well as MSSB), UBS Securities (and UBS Financial Services).

Two firms, Jefferies and Nomura Securities, have agreed to pay $50 million each. One firm, Cantor Fitzgerald, has agreed to pay a $10 million penalty.

As well as the aforementioned penalties, the firms have agreed to boost their compliance policies and procedures.

Gurbir Grewal, director of the SEC’s division of enforcement, says recordkeeping requirements are “sacrosanct”.

Grewal adds: “If there are allegations of wrongdoing or misconduct, we must be able to examine a firm’s books and records to determine what happened.”


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