Sixteen firms in the advisor and broker industries have agreed to pay $81 million in penalties to settle SEC allegations that they were responsible for “pervasive company-wide failures” in maintaining and preserving personal texts regarding company business, including investment recommendations and broker-dealer business.

The latest settlements are part of a multi-year push by the SEC to halt off-channel communications activity and recordkeeping failures involving messaging apps and other off-channel communications. The latest 16 firms to settle over their recordkeeping infractions join more than 40 registrants who have settled with the SEC over similar charges, for fines and penalties totaling $1.5 billion.

According to the SEC, from at least 2019 or 2020, the 16 firms, including five broker-dealers, seven dually registered broker-dealers and investment advisers and four affiliated investment advisors, allowed employees, supervisors and senior managers to use personal cellphones to communicate by text about firm business without preserving the substantial majority of these off-channel communications.

By failing to maintain and preserve required records, “some of the firms likely deprived the SEC of these off-channel communications in various SEC investigations,” the agency said.

As part of their settlements, the 16 firms admitted their conduct violated recordkeeping provisions of the federal securities laws and agreed to pay combined civil penalties of more than $81 million. They have also “begun implementing improvements to their compliance policies and procedures to address these violations,” the SEC said.

The SEC said it settled with the following firms:
• Northwestern Mutual Investment Services LLC, Northwestern Mutual Investment Management Co. LLC and Mason Street Advisors LLC(collectively, Northwestern Mutual), which agreed to pay a $16.5 million penalty.
• Guggenheim Securities LLC and Guggenheim Partners Investment Management LLC (GPIM) (collectively, Guggenheim), which agreed to pay a $15 million penalty.
• Oppenheimer & Co. Inc., which agreed to pay a $12 million penalty.
• Cambridge Investment Research Inc. together with Cambridge Investment Research Advisors Inc., which together agreed to pay a $10 million penalty.
• Key Investment Services LLC (KIS), together with KeyBanc Capital Markets Inc. (KBCM) (collectively, Key), which agreed to pay a $10 million penalty.
• Lincoln Financial Advisors Corporation, together with Lincoln Financial Securities Corporation (collectively, Lincoln), which agreed to pay an $8.5 million penalty.
• U.S. Bancorp Investments Inc., which agreed to pay an $8 million penalty.
• The Huntington Investment Company (HIC), together with Huntington Securities Inc. (HSI) and Capstone Capital Markets LLC (collectively, Huntington), which after self-reporting agreed to pay a $1.25 million penalty.

“Today’s actions against these 16 firms result from our continuing efforts to ensure that all regulated entities comply with the recordkeeping requirements, which are essential to our ability to monitor and enforce compliance with the federal securities laws,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said in a statement.

Grewal noted that Huntington’s penalty “reflects its voluntary self-report and cooperation.”