Dozens of financial groups to pay nearly $400 million in SEC probe of messages

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Twenty-six Wall Street firms have agreed to pay $393 million to the Securities and Exchange Commission to settle the latest round of charges over texting and messaging employees on platforms like WhatsApp about business matters.

Ameriprise, Edward Jones, LPL Financial and Raymond James are among the financial groups settling with the SEC, with each of the four paying $50 million in penalties, the regulator announced Wednesday. Fines go up to $50 million for a company and up to $400,000, the regulator said, noting that groups that self-reported violations will pay “significantly lower” penalties than they would have otherwise.

The fines underscore how far the agency’s probe has expanded from the initial target of big investment banks to broker-dealers and investment advisers. Industry advocates protested the expanded parameters of the probe, saying the SEC was overstepping its bounds because record-keeping rules are slightly different for money managers.

Gurbir Grewal, who heads the SEC’s enforcement division, said: “We remain committed to ensuring compliance with the accounting and recordkeeping requirements of the federal securities laws, which are critical to the protection of investors and the smooth functioning of the markets.”

Other fines include $45 million for RBC Capital Markets, $40 million for BNY Mellon and Pershing and $30 million for TD Securities and two affiliates, the SEC said.

The regulators’ orders repeatedly say that investigators found “pervasive out-of-channel communications at various levels of seniority” by groups accepting settlements. In the case of Piper Sandler, which agreed to pay a $14 million SEC penalty, a department head sent “numerous” messages in 2021 with at least 20 colleagues and at least nine “external securities industry contacts” related to brokerage business. matter, SEC said.

Broker-dealers and advisers are required to retain certain employee communications regarding business matters to ensure compliance with securities laws, namely anti-fraud measures and financial responsibility standards, the SEC noted. The regulator said the rules were necessary to protect investors and that failure to comply could undermine investigations.

The settlements and fines reflect the latest fallout from the SEC’s industry-wide probe, since JPMorgan Chase agreed to pay $200 million to the SEC and the Commodity Futures Trading Commission in late 2021. The SEC has levied approximately $2 billion in financial penalties dollars against dozens of companies. through evidence investigations from the end of 2021.

“We are deeply concerned that the SEC is attempting to exceed its authority under the Advisers Act and is engaging in rulemaking through enforcement through its current oversight of out-of-channel communications,” said the Investment Company Institute, which represents interests US asset managers. in a previous letter to the SEC.