The Securities and Exchange Commission announced that 16 firms—comprising broker-dealers, investment advisers, and dually registered entities—were being fined over $81 million for off-channel communications compliance failures. This brings the total fines levied by the SEC and Commodity Futures Trading Commission for off-channel communications and recordkeeping issues to over $2.6 billion.
These off-channel fines are increasingly common—reminiscent of “Groundhog Day.” But unlike the 1993 Bill Murray comedy film, each iteration of the SEC’s announcements includes slight variations and offers opportunities for compliance officers to consider refinements to strategic objectives. We explore the nuances of the latest round of fines and offer practical suggestions for compliance officers.
One salient feature of this set of fines is the clear benefit of credit for cooperation and self-reporting of recordkeeping gaps. While generally the fines ranged from $8 million to $16.5 million, Huntington, the firm that self-reported compliance issues, was fined $1.25 million—a pronounced and meaningful difference in magnitude.
Two other attributes of these fines are worth highlighting as well. First, the involvement of senior staff in prohibited activity continues to draw the SEC’s ire. Additionally, several fines mentioned the use of both unapproved communications methods, or applications, as well as the use of personal devices.
Read the full article here!
