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The SEC has charged 16 Wall Street firms a total of $1.1Bn for poor record keeping, with 8 firms (5 affiliates) agreeing to pay $125Mn each, 2 firms $50Mn each and 1 firm $10Mn.
‘From January 2018 through September 2021, the firms employees routinely communicated about business matters using text messaging on their personal devices. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws.’
This is a difficult risk to manage. From my own experience personal devices were not allowed on trading floors and all staff were regularly informed about the consequences ‘off channel communications’. It’s hard to stop people using their personal devices in a bar.
The penalties and undertakings send a reminder of the actions of non-compliance, that include an independent compliance consultant to review and report regulatory compliance policies, risk mitigation solutions, training provided, compliance surveillance programs and compliance to policies. In addition the organisations are to provide additional training, adopt agreed remediations in non compliance, undertake reviews by internal audit and certify compliance.
One wonders whether compliance certification also fits in with the DoJs CCO program?
Ted Dziekanowski
#regulatorycompliance #governance #riskmanagement #theaugustagroup
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