SEC Fines 11 Wall Street Firms for Alleged Recordkeeping Violations

<p>The US securities regulator has fined 11 broker-dealers a
combined penalty of USD $289 million for allegedly violating the regulation on
recordkeeping procedures. The Securities and Exchange Commission (SEC) has
issued cease and desist orders against the companies which have admitted the
violations.</p><p>The mentioned companies
are the subsidiaries of Well Fargo, which agreed to pay USD $125 million in
penalty. BNB Paribas Securities Corp, and SG Americas Securities, have
each agreed to a fine of USD $35 million, according to the statement by the <a href="https://www.financemagnates.com/tag/us-sec/" target="_blank" rel="follow">SEC</a>.</p><p>The other companies are
BMO Capital Markets, Mizuho Securities USA, Houlihan Lokey Capital, Moelis
&amp; Company, Wedbush Securities, and SMBC Nikko Securities America. Wedbush,
which operates as a broker-dealer and an investments adviser, was charged with
additional charges for allegedly violating the Investment Advisers Act of 1940
and failing to prevent or detect the violations.</p><p>Investor Protection</p><p>Gurbir Grewal, SEC's
Director of Division of Enforcement, said: "Compliance with the books and
records requirements of the federal securities laws is essential to investor
protection and well-functioning markets."</p><p>"And while some
broker-dealers and investments advisers have heeded this message, self-reported
violations, or improved internal policies and procedures, today's actions
remind us that many still have not," he added. </p><p>Specifically, the
regulator identified off-channel communication in the 11 firms where employees
communicated through messaging platforms like WhatsApp, iMessage, and Signal.
Thus the companies reportedly did not maintain records of their communications.</p><p>Monitoring and
Enforcement of Compliance</p><p>The <a href="https://www.financemagnates.com/terms/s/securities-and-exchange-commission-sec/" target="_blank" rel="follow">SEC</a> maintains that such omission denies the
regulator the ability to exercise proper oversight roles such as monitoring and
enforcement of compliance with federal securities laws. Additionally, the
regulator observed that the violations were conducted by the employees at different levels of authority.</p><p>Meanwhile, today
(Tuesday), the <a href="https://www.financemagnates.com/terms/c/cftc/" target="_blank" rel="follow">Commodity Futures
Trading Commission (CFTC)</a> imposed
more than USD $1 billion in penalties against swap dealers and their affiliated
futures commission merchants for allegedly violating bookkeeping procedures.</p><p>CFTC's
commissioner Kristin Johnson said: "The increasingly pervasive use of
personal electronic communications, including email, text, social media, and
chart-based apps to conduct regulated business may enable faster and easier
communication. However, using unapproved channels violates important regulatory
recordkeeping requirements."</p>

This article was written by Jared Kirui at www.financemagnates.com.