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The U.S. Securities and Exchange Commission (SEC) has imposed substantial fines on major companies, including financial giants, for using unapproved communication methods. These companies will collectively pay a total of $63.1 million due to violations related to record-keeping regulations.
Details of the Fines
The SEC identified that these firms breached federal securities laws concerning record-keeping requirements. Employees, executives, and auditors from the affected companies communicated through unofficial channels, which led the regulator to conclude that the firms did not adequately monitor their personnel’s use of unauthorized messaging platforms.
Among the companies penalized are significant financial service providers such as Charles Schwab, Santander, and Blackstone. Blackstone Alternative Credit Advisors LP, Blackstone Management Partners L.L.C., and Blackstone Real Estate Advisors L.P. agreed to pay $12 million in fines collectively.
“When firms fail to meet these obligations, the consequences extend beyond inadequate documentation; such failures affect market transparency and integrity,” -Sanjay Wadhwa, Deputy Director of the SEC’s Enforcement Division.
In addition to monetary penalties, the SEC cautioned financial institutions to halt record-keeping violations and prevent further infractions. Firms are currently in the process of restructuring their protocols to address gaps in compliance policies.
Cryptocurrency and Traditional Finance
Companies aim to implement new compliance policies established by the SEC to prevent similar violations in the future. The SEC has stated that it will maintain strict oversight to ensure these breaches do not recur. While the SEC has criticized cryptocurrencies for irresponsibility and non-compliance, it has yet to create specific regulations for this sector. This situation suggests that traditional financial institutions, often seen as more reputable, also have their share of compliance issues.
If similar sanctions had been imposed on popular cryptocurrency exchanges, mainstream media would likely have highlighted the story. However, if your company is large enough, it becomes less of a concern for mainstream outlets.
In conclusion, the SEC’s actions are viewed as a crucial step towards ensuring that financial markets adhere to regulations. Investment advisors and brokerage firms plan to strengthen their internal audits to avoid similar penalties in the future.
