16 Wall Street Firms admit to Recordkeeping Failures, agree to pay $1.1 billion in penalties

The SEC charged 15 broker-dealers and one affiliated investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications.

The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws.

The following eight firms (and five affiliates) have agreed to pay penalties of $125 million each:

  • Barclays Capital Inc.
  • BofA Securities Inc. together with Merrill Lynch, Pierce, Fenner & Smith Inc.
  • Citigroup Global Markets Inc.
  • Credit Suisse Securities (USA) LLC
  • Deutsche Bank Securities Inc. together with DWS Distributors Inc. and DWS Investment Management Americas, Inc.
  • Goldman Sachs & Co. LLC
  • Morgan Stanley & Co. LLC together with Morgan Stanley Smith Barney LLC
  • UBS Securities LLC together with UBS Financial Services Inc

The following two firms have agreed to pay penalties of $50 million each:

  • Jefferies LLC
  • Nomura Securities International, Inc.
  • Cantor Fitzgerald & Co. has agreed to pay a $10 million penalty.

The SEC staff’s investigation uncovered pervasive off-channel communications. The firms cooperated with the investigation by gathering communications from the personal devices of a sample of the firms’ personnel. These personnel included senior and junior investment bankers and debt and equity traders.

From January 2018 through September 2021, the firms’ employees routinely communicated about business matters using text messaging applications on their personal devices. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws. By failing to maintain and preserve required records relating to their businesses, the firms’ actions likely deprived the Commission of these off-channel communications in various Commission investigations. The failings occurred across all of the 16 firms and involved employees at multiple levels of authority, including supervisors and senior executives.

SEC