The SEC has continued its multi-year initiative charging firms with recordkeeping failures arising from "off-channel" business communications — messages sent over personal text, WhatsApp, Signal, and similar platforms that were not preserved as required by the federal securities laws.
In an August 2024 sweep, the SEC charged 26 firms with recordkeeping and related supervision failures, with civil penalties ranging from $400,000 to $50 million per firm depending on the conduct and each firm's cooperation and self-reporting.
The recordkeeping initiative, which the SEC launched in December 2021, has spanned broker-dealers, investment advisers, and dual registrants and has produced billions of dollars in cumulative penalties across successive actions.
The SEC found that personnel at charged firms routinely discussed business matters on unapproved platforms without archiving those communications. The agency has credited firms that self-reported and cooperated with comparatively reduced penalties.
Firms are expected to implement technology controls to capture business communications, conduct regular surveillance, train staff, and take meaningful disciplinary action against employees who violate communications policies.