Another Sweep of Recordkeeping Violations

On January 13, 2025, the SEC announced charges against nine investment advisers and three broker-dealers for failure to maintain and preserve required electronic communications in violation of applicable recordkeeping provisions.  Combined, these firms paid civil penalties of $63.1 million and are required to implement improvements to their policies and procedures to address their violations.   Each firm’s personnel engaged in “off-channel” methods of communication that were not captured by the firm for recordkeeping purposes.  Violators included senior managers of firms.

The SEC emphasized once again that self-reporting firms pay significantly lower civil penalties than what they normally would.  In this round of charges, the sole self-reporting firm faced a fine of $600k v. the average fine of $5.6mm that non-self-reporting firms faced.

As mentioned in a previous post, recordkeeping violations are an evergreen source of regulatory fines due to the ubiquitous use of electronic communications coupled with personnel, including those in management positions, who fail to comprehend the grave implications of utilizing off-channel methods of communication, even for internal firm communications.

Concerned about your firm’s recordkeeping obligations?  Contact us at info@stecroixconsulting.com for assistance. We are here to help.