The Securities and Exchange Commission has announced that 10 firms will pay a combined $79 million in penalties for failing to comply with regulations surrounding maintaining and preserving electronic communications.
The news follows a year of strict enforcements by North American regulators with 13 firms being fined a total of $549 million for record keeping failures just last month.
Director of the SEC’s Division of Enforcement, Gurbir S. Grewal commented on the news stating that “One of the orders included in today’s announced actions is not like the others,” he continued, “There are real benefits to self-reporting, remediating and cooperating.”
As well as facing substantial financial penalties, each company received directives to halt any further breaches of the applicable recordkeeping regulations and received censures. The firms have also agreed to enlist independent compliance experts to perform thorough evaluations of their policies and protocols concerning the preservation of electronic communications stored on personal devices and their approaches to handling employee non-compliance with these policies and procedures.
In related news, the Commodity Futures Trading Commission (CFTC) also announced today that it was fining a mutual firm that was named in the SEC’s list. The firm in question is being fined an additional $20 million by the CFTC for failing to maintain and preserve records that were required to be kept under its recordkeeping requirements, while also failing to diligently supervise matters related to their businesses as CFTC registrants.
It is evident that the regulators are now targeting smaller firms, with Wall Street giants being fined left, right, and center in 2022. It is now clear that no matter the size of a firm if it fails to comply with regulations, the regulators will take action.
SteelEye’s 2023 Annual Compliance Health Check Report revealed that 71% of firms are investing in eComms monitoring in response to the increased fines over the last 18 months. However, the report also discovered that only 50% of firms are actively monitoring WhatsApp, leaving half of the market vulnerable to future fines similar to what was handed out today. After today’s announcement, it seems likely that many firms will be revisiting these objectives with renewed urgency.
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