SEC Imposes $79M in Fines on Advisers for Recordkeeping Violations

The Securities and Exchange Commission Friday fined 10 firms a total of $79 million for recordkeeping violations. The firms include 5 broker/dealers, two affiliated investment advisers, and three dually registered firms. The firms admitted fault and were censured.

The SEC found that every firm had employees, including senior managers, who were using personal devices for business communications. The communications included information related to investment advice and recommendations and the majority of it was not preserved. The SEC said that the absence of the communications “likely deprived the SEC of these off-channel communications in various SEC investigations.”

The SEC requires that firms maintain and retain records to enable it, self-regulatory organizations and state securities regulators to conduct effective examinations.

The largest fine was assessed on Interactive Brokers Corp., which was fined $35 million. The SEC found that the firm had policies and procedures to ensure compliance with SEC recordkeeping requirements, but never properly implemented them. The SEC order said that senior directors across the firm violated policies for years.

The CFTC also on Friday announced a fine of its own against Interactive Brokers for $20 million.

The smallest fine was against Perella Weinberg Partners LP, for $2.5 million. The SEC said that the smaller size of the fine was because the violations were self-reported to the SEC.

The other penalized firms were Robert W. Baird & Co. Inc., William Blair & Company LLC, Nuveen Securities LLC, and Fifth Third Securities Inc.; which were fined amounts ranging from $8 million to $15 million.