SEC Slams LPL, Raymond James, 24 Others With $393M in Off-Channel Messaging Fines

What You Need to Know

The latest salvo in the regulator’s crackdown on unauthorized texting and messaging app use has hit RIAs, BDs and dually registered firms.
The SEC has levied more than $3 billion in fines in its off-channel communications sweep.
Firms that self-reported received smaller penalties.

More than two dozen financial firms have agreed to pay a combined $392.75 million in civil penalties to settle Securities and Exchange Commission charges over “widespread and longstanding failures” to maintain records related to off-channel communications, the SEC announced Wednesday.

The commission announced charges against 26 broker-dealers, RIAs and dually registered broker-dealers, which admitted the facts set forth in their respective SEC orders, acknowledged their conduct violated federal securities laws and agreed to pay the civil penalties.

The probe focused on firms’ failure to keep records on communications sent through texting and unauthorized messaging apps.

The firms have started implementing improvements to their compliance policies and procedures to address the violations, the SEC said. Three firms self-reported their violations and therefore will pay significantly lower civil penalties than they would have otherwise.

The following firms have agreed to pay penalties:

Ameriprise Financial Services LLC, $50 million
Edward D. Jones & Co. L.P., $50 million
LPL Financial LLC, $50 million
Raymond James & Associates Inc., $50 million
RBC Capital Markets LLC, $45 million
BNY Mellon Securities Corp., together with Pershing LLC, $40 million
TD Securities (USA) LLC, together with TD Private Client Wealth LLC and Epoch Investment Partners Inc., $30 million
Osaic Services Inc., together with Osaic Wealth Inc., $18 million
Cowen and Co., together with Cowen Investment Management, $16.5 million
Piper Sandler & Co., $14 million
First Trust Portfolios L.P., $8 million
Apex Clearing Corp., $6 million
Truist Securities Inc., together with Truist Investment Services and Truist Advisory Services, which self-reported, $5.5 million penalty
Cetera Advisor Networks LLC, together with Cetera Investment Services LLC, which self-reported, $4.5 million
Great Point Capital LLC, $2 million
Hilltop Securities Inc., which self-reported, $1.6 million
P. Schoenfeld Asset Management LP, $1.25 million
Haitong International Securities (USA) Inc., $400,000

“As today’s enforcement actions against more than two dozen firms reflect, we remain committed to ensuring compliance with the books and records requirements of the federal securities laws, which are essential to investor protection and well-functioning markets,” said Gurbir S. Grewal, director of the SEC’s enforcement division.

“Among this group of firms, there are several that differentiated themselves by self-reporting prior to the staff’s investigation, demonstrating once again the real benefits of proactive cooperation,” Grewal said.

Each of the SEC’s investigations uncovered “pervasive and longstanding use of unapproved communication methods,” known as off-channel communications, at these firms.