SEC Charges 10 Broker-Dealers and 1 Dual-Registered Firm Over Electronic Communications Record-Keeping Failures

Today, the Securities and Exchange Commission (SEC) charged 11 firms for failing to maintain and preserve electronic communications. Wells Fargo Securities, LLC together with its subsidiaries, Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, will pay a $125 million penalty along with other settlements from BNP Paribas Securities Corp., SG Americas Securities, LLC, BMO Capital Markets Corp., Mizuho Securities USA, LLC, Houlihan Lokey Capital, Inc., Moelis & Company LLC, Wedbush Securities, Inc., and SMBC Nikko Securities America, Inc., amounting to an additional $164 million in penalties. The SEC alleged that the firms' employees used third-party messaging platforms including iMessage, WhatsApp, and Signal, on their personal devices to conduct business of their employers, which were not properly stored or preserved. The SEC also found that some of the firms likely deprived it of these off-channel communications within various SEC investigations. The firms admitted the facts set forth in their SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay the combined penalties, and have begun implementing improvements to their compliance policies and procedures to address these violations. In addition, each firm was ordered to cease and desist from future violations, and retain independent compliance consultants to address non-compliance with their respective policies and procedures. The Commodity Futures Trading Commission also announced settlements in relation to this matter.