SEC Charges 26 Entities for Recordkeeping Violations

In a continuation of its off-channel communications enforcement action efforts, on August 14, 2024, the SEC announced charges against 26 investment advisers, broker-dealers and dual registrants for recordkeeping violations relating to business messages sent on encrypted services such as WhatsApp.  The SEC reached a settlement total of $392.75 million in connection with the settlements.  The firms involved were each charged with violating recordkeeping requirements of the Advisers Act, the Exchange Act, or both, as well as with failure to reasonably supervise their personnel in order to detect and prevent such violations.  In light of the ongoing regulatory focus on off-channel communications, fund directors may seek to ask the investment adviser of their funds what policies and procedures are in place at their firm regarding the use of off-channel communications. 

Click here to read the SEC’s Press Release covering the charges and settlements.