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Day: July 18, 2018

Broker-Dealer Fined $1.25 Million for Deleting Phone Calls and Inadequate Records Retention


The SEC fined a broker-dealer $1.25 Million for deleting recorded telephone conversations and failing to maintain books and records related to broker expenses.  The broker-dealer deleted audio files after receiving an SEC request.  The BD failed to “ensure that this litigation hold notice was distributed to the technicians in department responsible for maintaining voice recordings.”  The SEC also charges the firm with multiple failures to maintain required records of broker personal expenses and gifts and entertainment.

OUR TAKE: The SEC will take punitive action against firms that fail to preserve regulatory records, whether or not the firm acted with bad intent.  We recommend creating a regulatory records chart to serve as reference for all employees.  Also, firms should create a policy and related procedures governing how it will ensure all employees comply with regulatory requests.