SEC Cracks Down on Off-Channel Communications in Investment Firms 

On January 13, 2025, the U.S. Securities and Exchange Commission (SEC) announced enforcement actions against nine investment advisers and three broker-dealers for failing to maintain and preserve required electronic communications. These firms admitted to using unauthorized communication channels—such as personal text messages, WhatsApp, and Signal—for business-related discussions, violating federal securities laws. 

The violations spanned multiple levels of personnel, including senior management, and compromised the firms’ ability to meet their record keeping obligations. 

Penalties and Enforcement Outcomes 

The SEC’s actions resulted in: 

• Over $63 million in civil penalties 

• Censure and cease-and-desist orders for all firms 

• Reduced penalties for PJT Partners due to proactive self-reporting and cooperation 
• These penalties underscore the SEC’s commitment to enforcing transparency and accountability in financial communications. 

Why This Matters for Investment Advisers 

This case serves as a critical reminder: recordkeeping is not optional. Investment advisers must: 

• Maintain accurate and complete records of all business communications 

• Avoid using unapproved messaging platforms 

• Implement robust compliance policies and training 

• Monitor and audit communication practices regularly 

• Failing to do so not only invites regulatory action but also erodes investor trust and market integrity. 

Best Practices to Stay Compliant 

To avoid similar violations: 

• Ban personal messaging apps for business use 
• Train employees on approved communication channels 
• Implement monitoring tools for electronic communications 
• Conduct regular audits of communication practices 
• Encourage self-reporting of potential violations 

SEC Charges Investment Adviser for Misleading AML Compliance Claims

Stay up to date with Marketing Rule and electronic communications compliance and speak to LawVisory to ensure you have the best practice approach to communication policies. 

Download the complete First Quarter 2025 Regulatory Update today to find out more.SEC Charges Investment Adviser for Misleading AML Compliance Claims