Wall Street giants face $470m penalty for recordkeeping violations in landmark settlement

A group of broker-dealers and investment advisors have agreed to pay over $470m to US regulators, according to Reuters.  

The settlement addresses civil charges related to violations of recordkeeping rules, according to statements from the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) on Wednesday.   

Among the firms that settled charges were Toronto-Dominion Bank's TD Securities, BNY, and Truist. These firms were found to have violated rules requiring broker-dealers and investment advisors to maintain records of work-related communications.  

The SEC and CFTC emphasized that these violations involved the use of “off-channel” communications, such as text messages and WhatsApp, which breached rules mandating the retention of certain work-related communications.   

While representatives for most firms did not immediately respond to requests for comment, a spokesperson for BNY stated that the firm takes its regulatory responsibilities seriously. TD Securities noted that it is investing in technology and improving its electronic communications policies. 

RBC Capital Markets mentioned that it would continue to enhance its compliance protocols.   

The penalties are part of a larger, ongoing enforcement initiative targeting Wall Street's failure to adhere to recordkeeping regulations. This initiative has focused on the use of unofficial communication channels by firms, which has led to widespread non-compliance with regulatory requirements.   

Below is a list of the firms and the penalties they agreed to pay:   

• Ameriprise Financial Services, LLC: $50m penalty to the SEC 

• Edward D. Jones & Co., L.P.: $50m penalty to the SEC 

• LPL Financial LLC: $50m penalty to the SEC 

• Raymond James & Associates, Inc.: $50m penalty to the SEC 

• RBC Capital Markets, LLC: $45m penalty to the SEC 

• BNY Securities Corporation, Pershing LLC: $40m penalty to the SEC 

• TD Securities (USA) LLC, TD Private Client Wealth LLC, Epoch Investment Partners, Inc.: $30m penalty to the SEC, $75m to the CFTC 

• Osaic Services, Inc., Osaic Wealth, Inc.: $18m penalty to the SEC 

• Cowen and Company, LLC, Cowen Investment Management LLC: $16.5m penalty to the SEC, $3m to the CFTC 

• Piper Sandler & Co.: $14m penalty to the SEC 

• First Trust Portfolios L.P.: $8m penalty to the SEC 

• Apex Clearing Corporation: $6m penalty to the SEC 

• Truist Securities, Inc., Truist Investment Services, Inc., Truist Advisory Services, Inc.: $5.5m penalty to the SEC, $3m to the CFTC 

• Cetera Advisor Networks LLC, Cetera Investment Services LLC: $4.5m penalty to the SEC 

• Great Point Capital, LLC: $2m penalty to the SEC 

• Hilltop Securities Inc.: $1.6m penalty to the SEC 

• P. Schoenfeld Asset Management LP: $1.25m penalty to the SEC 

• Haitong International Securities (USA) Inc.: $400,000 penalty to the SEC 

This settlement marks a significant development in the ongoing effort by US regulators to enforce compliance with recordkeeping requirements across the financial industry.