UNITED STATES: SEC Fines Investment Firms for Recordkeeping Failures

Tuesday January 14 2025

On 13^th January 2025, the Securities and Exchange Commission (SEC) announced charges against nine investment advisers and three broker-dealers for failures by the firms and their personnel to maintain and preserve electronic communications, in violation of recordkeeping provisions of the federal securities laws.

The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined civil penalties of $63.1 million, and have begun implementing improvements to their compliance policies and procedures to address these violations. One of the firms, self-reported its violations and, as a result, will pay significantly lower civil penalties than it would have otherwise.

The firms were each charged with violating certain recordkeeping provisions of the Investment Advisers Act or the Securities Exchange Act. The firms were also each charged with failing to reasonably supervise their personnel with a view to preventing and detecting those violations. In addition to the significant financial penalties, each of the firms was ordered to cease and desist from future violations of the relevant recordkeeping provisions and was censured.

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