SEC Imposes $81 Million in Fines on 16 Financial Firms Over Employee Texting Violations
The Securities and Exchange Commission penalizes 16 financial institutions $81 million for employees discussing business via private text messages without proper recordkeeping.
Diccon Hyatt is a seasoned financial and economic journalist who has extensively covered the evolving economy during the pandemic, translating complex financial issues into clear, relatable insights that highlight their effects on personal finances and markets. His work has appeared in U.S. 1, Community News Service, and the Middletown Transcript.
Key Highlights
- The SEC fined 16 financial firms a total of $81 million for employees conducting business discussions through private text messages that were not properly archived.
- Financial firms are mandated by the SEC to preserve all business communications to facilitate potential investigations.
- In recent years, the SEC has intensified enforcement of communication and recordkeeping regulations, resulting in billions of dollars in fines for violations.
Increasingly, financial companies are under scrutiny by the Securities and Exchange Commission due to improper employee communication practices.
The SEC announced on Friday that it has levied $81 million in fines against 16 financial firms for employees engaging in business-related conversations through private text messaging platforms without maintaining records, an essential compliance breach. The penalties imposed on broker-dealer firms ranged from $1.25 million to $16.5 million.
These actions are part of a broader crackdown over the past two years on unauthorized “off-channel” communications by Wall Street firms. The SEC requires firms to conduct business communications through approved channels and retain these records to ensure transparency and accountability during investigations.
“These enforcement actions reflect our ongoing commitment to ensuring that all regulated entities adhere to recordkeeping requirements vital for monitoring and enforcing federal securities laws,” stated Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
The fined companies include:
- Northwestern Mutual Investment Services (NMIS): $16.5 million
- Guggenheim Securities: $15 million
- Oppenheimer: $12 million
- Cambridge: $10 million
- Key Investment Services and KeyBanc Capital Markets: $10 million
- Lincoln Financial: $8.5 million
- U.S. Bancorp: $8 million
- Huntington: $1.25 million
The reduced penalty for Huntington reflects their proactive self-reporting and cooperation with the SEC, according to Grewal.
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