A dozen financial services firms were penalized by the Securities and Exchange Commission (SEC) as the agency continues its enforcement sweep of recordkeeping violations regarding employee use of off-channel communications for business purposes.
The latest round of fines announced Friday targeted broker-dealers, investment advisers, and credit rating agencies. The largest penalty the SEC assessed was $35 million against Interactive Brokers Corp. and its affiliate Interactive Brokers LLC. The Commodity Futures Trading Commission (CFTC) also fined Interactive Brokers $20 million.
The CFTC did not levy any additional penalties against firms disciplined by the SEC. In previous sweeps, the agencies combined to dish out fines totaling $200 million or more to many of the world’s largest banks, including Bank of America, Barclays, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, UBS, and Wells Fargo.
The cases have largely played out the same: The firms have admitted widespread failures in monitoring, maintaining, and preserving business-related communications by employees through messaging platforms on personal devices, including iMessage and WhatsApp. Violations have sometimes occurred among senior executives at the firms, despite internal policies and procedures forbidding such activity.
The breakdown of penalties announced Friday is as follows:
- Interactive Brokers to pay $55 million total between SEC and CFTC;
- Robert W. Baird & Co. to pay $15 million;
- William Blair & Company and affiliate William Blair Investment Management to pay $10 million;
- Nuveen Securities to pay $8.5 million;
- Fifth Third Securities to pay $8 million; and
- Perella Weinberg Partners, together with Tudor, Pickering, Holt & Co. Securities and Perella Weinberg Partners Capital Management, to pay $2.5 million.
Perella was acknowledged for self-reporting to the SEC.
Separate from that group, the SEC announced fines of $6 million against DBRS and $4 million against Kroll Bond Rating Agency for similar admitted violations. The credit rating agencies were singled out in part because of their “critical gatekeeping function,” said Osman Nawaz, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit, in an agency release.
DBRS was fined an additional $2 million for violating disclosure and internal control provisions of the federal securities laws in rating certain commercial mortgage-backed securities. The firm did not admit those alleged failures.
DBRS had no comment regarding the SEC’s additional order.
- Commodity Futures Trading Commission
- Fifth Third Securities
- Financial Services
- Interactive Brokers
- Kroll Bond Rating Agency
- Nuveen Securities
- off-channel communications
- Perella Weinberg Partners
- Regulatory Enforcement
- Risk Management
- Robert W. Baird & Co.
- Securities and Exchange Commission
- United States
- William Blair & Company