SEC and CFTC Wall Street Resolutions Highlight Need for Communication and Records Compliance

Sixteen Wall Street firms have reached resolutions with the SEC in cases relating to widespread failures to maintain and preserve electronic communications. The focus of the investigations was “pervasive off-channel communications” on employees’ personal devices that the firms failed to retain and preserve as required by federal securities laws. The firms agreed to pay combined penalties of $1.1 billion, with individual penalties ranging from $10 million for Cantor Fitzgerald up to $125 million for firms including Barclays, Citigroup, Credit Suisse, Deutsche, and Morgan Stanley. The firms also agreed to retain compliance consultants to conduct comprehensive reviews of their policies and procedures relating to the retention of electronic communications on personal devices and their frameworks for addressing non-compliance by their employees. In a parallel effort, the CFTC announced a combined $710‑million resolution with 11 firms over similar violations. The sweeping industry probe is one of the largest collective resolutions for the SEC and CFTC. See our three-part series on electronic communications: “Current Technological Landscape and Relevant Regulatory Measures” (Aug. 18, 2021); “Useful Training Techniques and Policies and Procedures to Adopt” (Sep. 8, 2021); and “Using Third Parties for Compliance, Mitigating Social Media Risks and Fulfilling Document Requests” (Sep. 15, 2021).

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