A settlement is being finalized between the Securities and Exchange Commission and Raymond James Financial over the use of off-channel business communications at the firm, according to Advisor Hub.
Raymond James reportedly has reached a settlement in principle with the SEC’s Division of Enforcement in which the firm would pay a $50 million civil penalty as part of the agreement to resolve the matter. The disclosure came in the broker-dealer’s recent quarterly filing. The settlement will be subject to review and final approval”by the SEC.
This would mark the latest enforcement action during the SEC’s investigation into financial firms sending messages over unauthorized channels, such as mobile phone texts and messaging apps including WhatsApp. The SEC launched the probe after many employees began working remotely during the pandemic. The investigation included broker-dealers’ compliance on retaining these off-channel communications on personal devices. Firms are required to monitor and save employee communications involving their business and customers.
The SEC has filed administrative complaints against dozens of firms alleging failures in compliance with record-keeping requirements involving off-channel communications. In October 2022, the SEC charged 15 broker-dealers and one affiliated investment advisor with widespread recordkeeping violations after finding widespread failures in maintaining and preserving electronic communications. This past February, 16 firms paid a total of over $81 million in civil penalties for widespread recordkeeping failures, specifically deficiencies in maintaining and preserving electronic communications.
Other firms have also said they are working towards settlements with the SEC over these violations, including Ameriprise Financial which said it had set aside $50 million for a potential settlement. Raymond James has been cooperating with the SEC’s investigation, the firm said.
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