Another Wave Of SEC Settlements Underscore The Continued Priority Of Record Retention Communication Compliance

On August 14, 2024, the U.S. Securities and Exchange Commission (SEC) announced another series of settlements regarding "off-channel communications."¹ As part of its Off-Channel Communications Initiative,² the SEC settled with 11 broker-dealers, three investment advisers, and 11 dual-registered broker-dealers and investment advisers (collectively, the Firms) for a combined $392.75 million in fees related to widespread recordkeeping failures by such firms. As we have previously written,³ settlements of this nature continue to be a focus of the SEC.⁴ We examine these settlements below.

Background

The SEC adopted Rule 17a-4 pursuant to Section 17(a)(1) of the Securities Exchange Act of 1934 (Exchange Act), which mandates that broker-dealers maintain and preserve certain records, including communications and business transactions, for specific periods and produce these records upon an SEC regulatory inspection (Broker-Dealer Recordkeeping Rule). Similar to Rule