The SEC charged more than 60 firms with recordkeeping failures related to off-channel communications in 2024, with penalties exceeding $560 million for the year alone.
In August 2024, the SEC announced charges against 26 firms resulting in over $390 million in combined penalties in a single enforcement action, its largest off-channel sweep to date.
Cumulative penalties since the SEC launched its off-channel communications initiative in December 2021 now surpass $3 billion, spanning broker-dealers, investment advisers, and dual registrants.
The SEC found that employees at the charged firms routinely used personal text messages, WhatsApp, Signal, and other platforms to discuss business matters without archiving these communications as required by federal securities laws.
Firms are expected to implement technology controls to prevent off-channel communications, conduct regular surveillance, and take meaningful disciplinary action against employees who violate communications policies.