SEC Fines 12 Firms Over $63 Million for Recordkeeping Failures

You might think that some of Wall Street’s biggest names would have the basics covered, like keeping track of emails and messages they’re legally required to save. But as as the Securities and Exchange Commission (SEC) revealed recently, even financial heavyweights can fumble the fundamentals—at a collective cost of $63.1 million in penalties.

The SEC charged 12 firms, including nine investment advisers and three broker-dealers, for failing to maintain and preserve electronic communications. The violations weren’t a case of misplaced Post-it Notes; they involved unapproved “off-channel communications” by employees at every level, from entry-level associates to senior managers.

The firms didn’t deny the charges. They owned up to the facts and admitted they had violated the recordkeeping provisions of federal securities laws. They’ve also committed to tightening up their compliance practices, though not without paying hefty fines first. Here’s how the penalties stack up:

• Blackstone (and its affiliates): $12 million.
• Kohlberg Kravis Roberts & Co. L.P.: $11 million.
• Charles Schwab & Co., Inc.: $10 million.
• Apollo Capital Management L.P.: $8.5 million.
• Carlyle Group entities: $8.5 million.
• TPG Capital Advisors LLC: $8.5 million.
• Santander US Capital Markets LLC: $4 million.
• PJT Partners LP, the standout in this mix, self-reported its violations and was rewarded with a significantly reduced penalty of $600,000.

For PJT, the SEC’s message was clear that if organizations fess up early, the consequences are far less painful.

What Went Wrong?

At its heart, this case is a reminder of how simple compliance missteps can snowball into multimillion-dollar headaches. The SEC’s investigations uncovered that personnel at these firms used unauthorized messaging apps and other unapproved communication methods. These messages—required by law to be preserved—were instead flying under the radar, creating gaps in transparency and accountability.

Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, didn’t mince words:

“When firms fall short of their obligations, the consequences go far beyond deficient document productions; such failures implicate the transparency and integrity of the markets. But today’s actions also show the tangible benefits of proactive cooperation, as seen with PJT Partners.”

In other words, don’t just break the rules and hope no one notices—fix the problem, and you might get a break.

Beyond the fines and finger-wagging, today’s announcement carries a broader lesson for the financial sector: compliance is non-negotiable. The SEC’s orders didn’t just slap penalties on these firms; they also imposed cease-and-desist directives to ensure they stay in line moving forward.

If you’re a compliance officer or someone tasked with keeping your firm’s operations above board, let this be a wake-up call. As flashy as the world of finance can be, sometimes it’s the seemingly mundane practices—like keeping proper records—that make or break your reputation (and your bottom line).

For firms still scrambling to review their policies, take a page from PJT Partners’ book: self-reporting doesn’t erase mistakes, but it can go a long way in softening the blow.

The SEC’s enforcement actions today aren’t just about penalizing bad behavior; they’re about setting the tone for what’s expected moving forward. Transparency, accountability, and robust compliance systems aren’t optional—they’re essential.

Wall Street, take note. Because as today’s penalties show, cutting corners might save time in the short run, but the long-term cost could be more than you bargained for.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.