The U.S. Securities and Exchange Commission (SEC) will collect $63.1 million in fines from nine investment advisers and three broker-dealers for using unapproved communications methods.
The SEC says the 12 Wall Street firms violated federal securities law statutes after their employees, including supervisors and managers, used off-channel communications methods to send and receive messages.
The regulator also says the companies in question failed to “provide reasonable supervision of their workforce” because they failed to implement protocols that could have stopped or detected the use of unauthorized messaging platforms.
Companies charged by the SEC include financial services firm Charles Schwab, multi-billion dollar bank Santander and alternative asset management firm Blackstone.
“Blackstone Alternative Credit Advisors LP, together with Blackstone Management Partners LLC and Blackstone Real Estate Advisors LP, agreed to pay a combined penalty of $12 million;
Kohlberg Kravis Roberts & Co. LP agreed to pay an $11 million fine;
Charles Schwab & Co., Inc. agreed to pay a $10 million fine;
Apollo Capital Management LP agreed to pay an $8.5 million fine;
Carlyle Investment Management LLC, together with Carlyle Global Credit Investment Management LLC, and AlpInvest Partners BV, agreed to pay a combined penalty of $8.5 million;
TPG Capital Advisors LLC agreed to pay an $8.5 million fine;
Santander US Capital Markets LLC agreed to pay a $4 million fine;
PJT Partners LP, which self-reported, agreed to pay a $600,000 fine.”
In addition to the fines, the SEC says the Wall Street firms have agreed to a censure and will stop further accounting violations. The regulator adds that the companies are now in the process of updating protocols to address gaps in compliance policies and procedures.
Says Sanjay Wadhwa, Acting Director of the SEC’s Enforcement Division:
“To effectively carry out their supervisory responsibilities, the Commission’s investigative and enforcement divisions must, and do, rely heavily on registrants to comply with the accounting and recordkeeping requirements of the federal securities laws.
If companies fail to meet these obligations, the consequences extend far beyond poor document production; Such failures compromise the transparency and integrity of the markets and their participants, such as the companies in question.”
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