Marc Gilman, general counsel of Theta Lake, outlines takeaways from SEC and CFTC orders imposing $1.8 billion in fines against over two dozen Wall Street firms for record-keeping failures involving electronic communications. He says these orders can serve as a roadmap for improving compliance controls.
On Sept. 27 the Securities and Exchange Commission and the Commodity Futures Trading Commission collectively announced a combined $1.8 billion in fines against more than two dozen Wall Street firms for failing to maintain and preserve electronic communications.
The charges stem from record-keeping failures and use of unapproved communication methods, including WhatsApp, to conduct business.
From a practical perspective, the actions provide a clear indication of the record-keeping and supervisory expectations of the SEC and CFTC and offer insight into how firms can improve compliance efforts.
These enforcement actions against broker-dealers, swap dealers, and futures commission merchants, combined with $200 million in fines issued in December 2021, brings the total for record-keeping lapses to more than $2 billion.
Given that prior fines for record-keeping failures were in the seven-figure range, these penalties coupled with mandatory remedial actions, including the engagement of third-party compliance consultants, reflect a new regulatory reality.
Read the full article by Marc Gilman at Bloomberg Law.
