11 more firms are being penalized by the Securities and Exchange Commission as part of its ongoing investigation into the use of unapproved communication methods, known as off-channel communications, according to Advisor Hub.
The firms were ordered to pay a combined $88 million for widespread and longstanding failures by the firms and their personnel to maintain and preserve electronic communications in violation of recordkeeping provisions of the federal securities laws. The SEC said the failures involved personnel at multiple levels of authority, including supervisors and senior managers.
The largest penalties were levied against Invesco and its Invesco Advisors unit, and Stifel Financial’s broker-dealer subsidiary Stifel, Nicolaus & Co. Those firms will pay $35 million each to settle allegations that they failed to properly retain representatives’ off-channel electronic communications.
The list of the firms involved in the case is as follows:
- Stifel, Nicolaus & Company, Inc. agreed to pay a $35 million penalty;
- Invesco Distributors, Inc., together with Invesco Advisers, Inc., agreed to pay a $35 million penalty;
- CIBC World Markets Corp., together with CIBC Private Wealth Advisors, Inc., agreed to pay a $12 million penalty;
- Glazer Capital, LLC agreed to pay a $2 million penalty;
- Intesa Sanpaolo IMI Securities Corp., agreed to pay a $1.5 million penalty;
- Canaccord Genuity LLC agreed to pay a $1.25 million penalty;
- Regions Securities LLC agreed to pay a $750,000 penalty;
- Alpaca Securities LLC agreed to pay a $400,000 penalty;
- Focused Wealth Management, Inc. agreed to pay a $325,000 penalty; and
- Qatalyst Partners LP will not pay a penalty.
Regulators said the firms admitted the facts set forth in their respective SEC orders, acknowledged their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay the penalties, and have begun implementing improvements to their compliance policies and procedures to address these violations.
“Today’s enforcement actions reflect the range of remedies that parties may face for violating the recordkeeping requirements of the federal securities laws,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “Widespread and longstanding failures, including where those failures potentially hinder the Commission’s investor protection function by compromising a firm’s response to SEC subpoenas, may result in robust civil penalties.”
A Stifel spokesperson declined to comment. The SEC noted that Stifel cooperated with the investigation by voluntarily interviewing senior personnel at the firm and gathering and reviewing messages on their devices.
Qatalyst Partners LP was not fined because it “self-reported, self-policed and demonstrated substantial efforts at compliance,” the SEC said. Grewal noted that firms that self-report and otherwise cooperate with the SEC’s investigations may receive significantly reduced penalties.
The attorneys at Hyman Cotter PC include former senior attorneys at the SEC whose legal experience and industry knowledge make them uniquely qualified to provide counsel on securities regulatory, compliance and enforcement matters. When it comes to regulatory compliance and enforcement matters, our attorneys have dealt with investigations and enforcement actions stemming from allegations including violations of SEC, FINRA, and SRO rules and regulations. If your firm is facing an investigation from a regulatory agency, please contact Hyman Cotter PC at 312-291-4600 or through our online contact form.
