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SEC Charges 16 Firms with $81 Million Penalty for Recordkeeping Failures

On Feb. 9, 2024, in a significant enforcement action, the Securities and Exchange Commission (SEC) announced charges against five broker-dealers, seven dually registered broker-dealers and investment advisers, and four affiliated investment advisers for widespread and longstanding failures to maintain and preserve electronic communications. These firms have collectively agreed to pay more than $81 million in civil penalties. The Violations and Penalties The SEC's investigation revealed that employees at these firms were using unapproved communication methods, known as off-channel communications, to discuss business matters. These methods included personal text messages, which the firms failed to maintain or preserve as required by federal securities laws. This lack of compliance deprived the SEC of critical information necessary for monitoring and enforcement. The penalties are substantial, as outlined below: Northwestern Mutual (NMIS, NMIM, and Mason Street): $16.5 million Guggenheim Securities (Guggenheim Securities and GPIM): $15 million Oppenheimer & Co. Inc.: $12 million Cambridge Investment Research (CIR and CIRA): $10 million Key Investment Services (KIS [...]

By |July 8th, 2024|Blog|
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SEC Secures $4.5 Billion Settlement in Landmark Terraform Labs and Do Kwon Case

On June 13, 2024, the Securities and Exchange Commission (SEC) announced a landmark settlement with Terraform Labs PTE, Ltd. and its CEO, Do Kwon, totaling over $4.5 billion. This resolution follows a unanimous jury verdict that held the defendants liable for orchestrating fraud involving crypto asset securities, resulting in massive investor losses when the scheme unraveled. Uncovering the Fraud In a nine-day jury trial held in April, the extent of Terraform Labs and Do Kwon’s deception was brought to light. The SEC presented evidence showing that the defendants had misled investors about the use of the Terraform block chain to settle transactions and the stability of their crypto asset security, UST. When UST de-pegged from the U.S. dollar in May 2022, its value, along with Terraform’s other tokens, plummeted to nearly zero, erasing $40 billion in market value almost overnight. This collapse caused devastating financial losses for countless investors, including many retail investors who had trusted Terraform’s false claims and [...]

By |July 2nd, 2024|Blog|
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