iA broker-dealer / swap dealer settled parallel SEC and CFTC charges for "widespread" recordkeeping failures related to communications on personal devices, personal email and Internet applications.
As outlined in the SEC Order and related CFTC Order, the agencies found that from January 2018 to November 2020 the firm failed to keep records of employee communications by employees sent on personal devices through text messages, WhatsApp and personal email accounts. The agencies stated that the firm's failure to respond to subpoenas regarding these communications with all of the requested information hindered their investigations. The firm later notified the agencies that the communications in question had been deleted and were unrecoverable.
As a result of the SEC's investigation, the SEC found that the broker-dealer violated registration, reporting and recordkeeping rules under Sections 15(b)(4)(E) and 17(a) of the Exchange Act and Rules 17a-4(b)(4) and 17a-4(j) thereunder. The CFTC found that the firm violated registration, reporting and recordkeeping rules under CEA Sections 4g, 4s(f)(1)(C) and 4s(g)(1) and (3) and CFTC Rules 1.31, 1.35, 23.201, and 23.202(a)(1) and (b)(1).
To settle the charges, the SEC and CFTC are stipulating that the firm (i) cease and desist from future violations, (ii) pay, jointly and severally, civil money penalties in the amounts of $125 million and $75 million respectively, plus post-judgment interest, and (iii) retain a compliance consultant per the SEC's Order to update the firm's communication policies, procedures and supervision.
