The SEC and the CFTC have recently imposed fines totalling $477.75m on 26 broker-dealers and investment advisers for failing to comply with electronic communication recordkeeping requirements. This latest enforcement wave pushes the total fines levied for similar violations to over $3bn, underscoring the serious, ongoing issue of non-compliance within the industry.
Theta Lake, which offers a digital communications governance and archiving solution, recently outlined the key takeaways from this wave of fines.
Recent investigations have highlighted a common theme: many financial institutions are still not fulfilling their recordkeeping and supervisory duties, it said. This negligence not only complicates regulatory oversight but also poses significant financial, reputational, and operational risks to the firms involved. To mitigate future penalties, firms must ensure all communications occur on regulated platforms where oversight is possible.
The SEC’s probe revealed widespread misuse of unapproved communication channels across various seniority levels within firms. These unauthorized communications often involved critical business matters such as investment advice and trade execution, significantly hindering the SEC’s ability to monitor compliance.
Read the full article by FinTech Global.
