On September 17, the SEC
charged 12 municipal advisors for not maintaining and preserving certain electronic communications, leading to over $1.3 million in civil penalties. The firms admitted to violations under Sections 15B and 21C of the Securities Exchange Act and agreed to implement compliance improvements. The penalties ranged from $40,000 to $324,000. In the press release, the SEC emphasized the importance of record-keeping for facilitating inspections and ensuring compliance with securities laws.
Most orders were alike, involving off-channel communications at various levels of seniority, including municipal advisor representatives and principals. These firms failed to maintain communications and agreed to establish new policies and conduct training to ensure compliance. Nearly all the firms were examined between 2020 and 2023.
One firm faced a $250,000 penalty for similar violations as the others. It has since revised its policies, enhanced training and considered technological improvements to boost compliance. The rationale behind the varied charges imposed on different firms remained unclear. Another firm that was fined $184,000 failed to implement adequate supervisory systems and relied on employees’ written acknowledgments without having appropriate follow-up measures. The SEC’s charges underscored the importance of accurate disclosures and robust internal controls.
