The SEC announced charges against nine investment advisers and three broker-dealers for failures by the firms and their personnel to maintain and preserve electronic communications, in violation of recordkeeping provisions of the federal securities laws. Each of the SEC’s investigations uncovered the use of unapproved communication methods, known as off-channel communications, at these firms. As described in the SEC’s orders, the firms admitted that, during the relevant periods, their personnel sent and received off-channel communications that were records required to be maintained under the securities laws. The failures involved personnel at multiple levels of authority, including supervisors and senior managers.

The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined civil penalties of $63.1 million, and have begun implementing improvements to their compliance policies and procedures to address these violations.

These cases focus on institutional advisers and private fund managers that are more similar to Standish Compliance clients than prior enforcement actions and provide useful insights into steps that advisers can take to confirm their compliance program is reasonably designed to prevent off-channel communication policy failures and recordkeeping violations.