Sixteen financial firms agreed to pay more than $81 million in civil fines after a federal probe found their employees used personal text messages for business purposes, marking the latest round of penalties to emerge from regulators' so-called WhatsApp investigations.
U.S. Bancorp Investments, Northwestern Mutual Investment Services, Guggenheim Securities and Oppenheimer were among firms cited in a statement Friday by the Securities and Exchange Commission. Northwestern will pay $16.5 million, the largest penalty of the group. Guggenheim, Oppenheimer and U.S. Bancorp will pay $15 million, $12 million and $8 million, respectively.
The SEC said it "uncovered pervasive and long-standing uses of unapproved communication methods" at various levels that included supervisors and senior managers from at least 2019 or 2020. The firms also didn't preserve most of those messages, violating securities laws, the agency said.
The firms, made up of investment advisers and broker-dealers, acknowledged the violations and agreed to improve their compliance policies and procedures, the SEC said.
Preserving messages
Friday's penalties add to the more than $2.5 billion that big banks previously agreed to pay the SEC and the Commodity Futures Trading Commission to settle similar investigations into use of text messages on personal phones and WhatsApp. Financial firms are required to monitor and save communications involving their business to head off potential misconduct.
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The failures by some of the firms "likely deprived the SEC of these off-channel communications in various SEC investigations," the agency said.
"Today's actions against these 16 firms result from our continuing efforts to ensure that all regulated entities comply with the record keeping requirements, which are essential to our ability to monitor and enforce compliance with the federal securities laws," SEC enforcement director Gurbir Grewal said in the statement.
The agency highlighted that Huntington Investment and its affiliates paid a smaller fine — $1.25 million — for self-reporting the misconduct and cooperating with investigators.
Other firms included in Friday's action were Cambridge Investment Research, Key Investment Services and Lincoln Financial Advisors.
U.S. Bancorp said in a statement, "We cooperated fully with the SEC's investigation, have been working proactively to enhance our technology and oversight further, to meet the expectations of our regulators and needs of our clients, and are pleased to have this matter behind us."
Guggenheim declined to comment on the matter. Lawyers for the other firms didn't immediately respond to messages.
The agency's full list of the fines, firms and their affiliates included:
- $16.5 million from Northwestern Mutual Investment Services, together with Northwestern Mutual Investment Management and Mason Street Advisors
- $15 million from Guggenheim Securities, together with Guggenheim Partners Investment Management
- $12 million from Oppenheimer
- $10 million from Cambridge Investment Research, together with Cambridge Investment Research Advisors
- $10 million from Key Investment Services, together with KeyBanc Capital Markets
- $8.5 million from Lincoln Financial Advisors Corp., together with Lincoln Financial Securities
- $8 million from U.S. Bancorp Investments
- $1.25 million from Huntington Investment, together with Huntington Securities and Capstone Capital Markets
