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Regulatory Perspectives

Blog: Recordkeeping – Fines, Fines and More Fines – Another $555m for 11 More Institutions

By August 11, 2023No Comments

The U.S. regulators the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have, once again, fined a raft of firms for ‘widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications.’

Critically, the firms concerned admitted the facts and acknowledged that their conduct violated recordkeeping provisions. The SEC sanctioned 11 firms with combined penalties of $289m and the firms have already begun implementing the required improvements to their compliance policies and procedures. The CFTC sanctioned 4 firms and a separately a futures commission merchant for recordkeeping and supervision violations with combined penalties of $266m and again the firms are undertaking the specified remedial actions.

The latest round of fines means that since December 2021, the CFTC has imposed $1.091 billion in civil monetary penalties on 18 financial institutions for their use of unapproved methods of communication, in violation of CFTC recordkeeping and supervision requirements. In addition, the SEC has, to date, brought 30 enforcement actions and ordered over $1.5 billion in penalties for violation of recordkeeping provisions. The issue remains a key regulatory priority with total fines now imposed for off-channel communications sitting at over $2.5bn.

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