• October 13, 2022
• Barclays
• Bank of America
• Cantor Fitzgerald
• Citigroup
• Credit Suisse
• Goldman Sachs
• Jeffries
• Morgan Stanley
• UBS Financial Services, Inc.

In September 2022, nine firms in total were found by the United States Securities and Exchange Commission (SEC) to be out of compliance with the federal agency’s recordkeeping and supervision regulations. These companies include:

• Barclays Capital, Inc.
• Citigroup Global Markets, Inc.
• BofA Securities, Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc.
• Goldman Sachs & Co., LLC
• Jefferies, LLC
• Morgan Stanley & Co. LLC and Morgan Stanley Smith Barney LLC
• Nomura Securities International, Inc.
• Credit Suisse Securities (USA), LLC
• Cantor Fitzgerald & Co.
• UBS Financial Services, Inc. and UBS Securities LLC

Allegations Of Misconduct Leading To Investment Loss

According to publicly available records released by the United States Securities and Exchange Commission (SEC), in September 2022, the agency sanctioned multiple firms for a failure to supervise broker communications via text messages, WhatsApp, and other electronic communications on brokers’ personal devices. Each of these firms was issued a cease-and-desist order and imposed several sanctions to address recordkeeping and supervision practices that failed to comply with SEC requirements. Firms are required to hire a compliance consultant whose role it is to review and evaluate policies, procedures and surveillance of electronic communication. The consultant’s report is due to the firm and the SEC within 45 days of completion, and firms will have 90 days to implement the reforms called for in the report, with limited opportunity to propose alternatives that are acceptable to the SEC. Additional on-going monitoring is also required, and firms must pay a civil penalty of $125M to the SEC.

• Barclays Capital, Inc. — “From at least January 2018 to September 2021, Barclays employees sent and received off-channel communications that related to the business of the broker-dealer operated by Barclays. Respondent did not maintain or preserve the substantial majority of these written communications. Barclays’ failure was firm-wide and involved employees at all levels of authority of the broker-dealer. As a result, Barclays violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.
• Citigroup Global Markets, Inc. — “From at least January 2018 to September 2021, CGMI employees sent and received off-channel communications that related to the business of the broker-dealer operated by CGMI. Respondent did not maintain or preserve the substantial majority of these written communications. CGMI’s failure was firm-wide and involved employees at all levels of authority. As a result, CGMI violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.
• BofA Securities, Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc. — “From at least January 2018 to September 2021, BAML employees sent and received off-channel communications that related to the business of the broker-dealers operated by BAML. Respondents did not maintain or preserve the substantial majority of these written communications. Respondents’ failures were firm-wide, and involved employees at all levels of authority. As a result, Respondents violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.
• Goldman Sachs & Co., LLC — “From January 2018 to September 2021, Goldman Sachs employees sent and received off-channel communications that related to the business of the broker-dealer operated by Goldman Sachs. Respondent did not maintain or preserve the substantial majority of these written communications. Goldman Sachs’s failure was firm-wide, and involved employees at all levels of authority. As a result, Goldman Sachs violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4)thereunder.” For a copy of the SEC sanction, click here.
• Jefferies, LLC — “From at least January 2018 to September 2021, Jefferies employees sent and received off-channel communications that related to the business of the broker-dealer operated by Jefferies. Respondent did not maintain or preserve the substantial majority of these written communications. The failure was firm-wide, and involved employees at all levels of authority. As a result, Jefferies violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.
• Morgan Stanley & Co. LLC and Morgan Stanley Smith Barney LLC — “From at least January 2018 to September 2021, Morgan Stanley employees sent and received off-channel communications that related to the business of the broker-dealer operated by Morgan Stanley. Respondents did not maintain or preserve the substantial majority of these written communications. Morgan Stanley’s failure was firm-wide, and involved employees at all levels of authority. As a result, Morgan Stanley violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.
• Nomura Securities International, Inc. — “From at least January 2018 to September 2021, NSI employees sent and received off-channel communications that related to the business of the broker-dealer operated by NSI. Respondent did not maintain or preserve the substantial majority of these written communications. NSI’s failure was firm-wide and involved employees at all levels of authority. As a result, NSI violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.
• Credit Suisse Securities (USA), LLC — “From at least January 2018 to September 2021, Credit Suisse employees sent and received off-channel communications that related to the business of the broker-dealer operated by Credit Suisse. Respondent did not maintain or preserve the substantial majority of these written communications. Credit Suisse’s failure was firm-wide and involved employees at all levels of authority. As a result, Credit Suisse violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.
• Cantor Fitzgerald & Co. — “From at least January 2018 to September 2021, Cantor employees sent and received off-channel communications that related to the business of the broker-dealer operated by Cantor. Respondent did not maintain or preserve the substantial majority of these written communications. Cantor’s failure was firm-wide and involved employees at all levels of authority. As a result, Cantor violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.
• UBS Financial Services, Inc. and UBS Securities LLC — “From at least January 2018 to September 2021, UBS employees sent and received off-channel communications that related to the business of the broker-dealer operated by UBS. Respondents did not maintain or preserve the substantial majority of these written communications. Respondents’ failure was firm-wide, and involved employees at all levels of authority. As a result, UBS violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder.” For a copy of the SEC sanction, click here.

We Help Investors Recover Investment Losses

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients.  To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.