The U.S. Securities and Exchange Commission (SEC) has announced fines totaling $63 million against 12 financial firms for failing to maintain and preserve electronic communications.
Two weeks into 2025, the SEC has sent a strong message that they will continue to hold firms of all sizes accountable for record keeping violations. The latest enforcement is comprised of nine investment advisers and three broker-dealers and involved personnel at multiple levels of authority, including supervisors and senior managers. The SEC's crackdown around off-channel communications - which began in December 2021 - initially targeted large tier-one banks, but has since expanded to include smaller and mid-size firms.
Notably, one firm received credit for self-reporting its violations and will pay a reduced civil penalty, aligning with the SEC's guidance that cooperation and self-reporting can lead to lesser penalties.
Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement said:
“In today’s actions, while holding firms responsible for their recordkeeping failures, the Commission once more recognized and credited a registrant’s self-report, demonstrating yet again that there are tangible benefits to be gained from proactive cooperation.”
This latest enforcement serves as a reminder that, despite potential shifts in regulatory focus with upcoming changes in U.S. administration, fundamental obligations like record keeping remain steadfast. Since its initial $125m penalty in December 2021, the SEC has now fined over 100 firms in excess of $2bn for their record keeping failures.
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