The US Securities and Exchange Commission (SEC) recently fined 12 firms a total of $88.3 million for failing to maintain and preserve electronic communications.
This action is part of the SEC's ongoing crackdown on off-channel communication violations that began in 2021. Financial firms are required to preserve written communications for regulatory purposes. However, the SEC has uncovered widespread use of unapproved communication methods across the industry.
Significant penalties include $35 million each for Stifel, Nicolaus & Co, and Invesco, and $12 million for the Canadian Imperial Bank of Commerce (CIBC). The Commodity Futures Trading Commission also fined CIBC $30 million for similar record-keeping violations. "Throughout this process, CIBC offered its full cooperation to both regulators and took immediate steps to implement remedies internally," a CIBC spokesman said in an email.
Since 2021, the SEC has sanctioned 60 firms for breaching record-keeping laws, resulting in over $1.7 billion in fines. Some firms, such as Qatalyst Partners and Atom Investors, avoided penalties by self-reporting violations, cooperating with the SEC, and improving their compliance processes. The SEC has also ordered several firms to cease violations and hire compliance consultants to review their procedures.
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