SEC Charges 11 Firms with Widespread Recordkeeping Failures

On August 8th 2023, the Securities and Exchange Commission announced charges against 10 firms in their capacity as broker-dealers and one dually registered broker-dealer and investment adviser for “widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications”.

The firms acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, and agreed to pay combined penalties of $289 million.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement commented “Compliance with the books and records requirements of the federal securities laws is essential to investor protection and well-functioning markets. To date, the Commission has brought 30 enforcement actions and ordered over $1.5 billion in penalties to drive this foundational message home. And while some broker-dealers and investment advisers have heeded this message, self-reported violations, or improved internal policies and procedures, today’s actions remind us that many still have not,”.

As firms prepare for SEC exams, Mr Grewal further advised that there are “three takeaways for those firms who haven’t yet done so: self-report, cooperate and remediate. If you adopt that playbook, you’ll have a better outcome than if you wait for us to come calling.”

Read the SEC press release here.

What can firms do to prepare for SEC reviews?

Registrants should conduct a review of recordkeeping requirements pursuant to SEC guidelines. A key component of this review should involve a review of the firm’s recordkeeping that supports such performance calculation. Additionally, firms should review all of the firm’s rule 17 recordkeeping requirements and ensure that all required records are kept.

How can Waystone Compliance Solutions help?

Stay ahead of regulatory requirements and safeguard your business with our trusted SEC Mock Audit Services.

Our team of expert US compliance specialists will conduct a Mock SEC Exam that will simulate an SEC Exam and cover core components of every SEC Exam, including;

• books and records
• document production
• onsite and offsite compliance review
• portfolio management-general trade allocation and anti-fraud.

A Mock SEC Exam will provide your firm with a review of your existing compliance program that is similar in nature to an SEC Examination. A report following the mock exam review and a set of recommendations for improvement will be the final deliverable. Clients of Waystone Compliance Solutions receive the highest level of support from Waystone to meet their regulatory obligations.

To learn more about how our Mock SEC Exam services can help protect your firm, contact your usual Waystone Compliance Solutions representative today.