The SEC cracked down further on firms accused of allowing illegal "off channel" communications with tens of millions in fines for Blackstone, Charles Schwab, KKR and other prominent firms.
The Securities and Exchange Commission announced Monday it had reached $63.1 million in total settlements with eight firms and their subsidiaries over alleged failures to track and record digital messages sent by their employees. The companies named include the investment management giants Blackstone, KKR, Apollo, Carlyle and the wealth management mainstay Charles Schwab.
For a full list of the firms and the penalties they agreed to pay, scroll down.
The firms were all accused of not doing enough to monitor their employees' use of unapproved communications methods to send messages related to business matters. The SEC said the recordkeeping violations at some firms occurred at the supervisor and senior management levels.
Regulators have said that financial service employees' use of WhatsApp and similar encrypted messaging services can impede their efforts to review business-related communications for evidence of misdeeds.
"In order to effectively carry out their oversight responsibilities, the commission's examinations and enforcement divisions must, and indeed do, rely heavily on registrants complying with the books and records requirements of the federal securities laws," Sanjay Wadhwa, the acting director of the SEC's division of enforcement, said in a statement.
READ MORE:
Over the past few years, the SEC and the Commodities Futures and Trading Commission have reached more than $3 billion worth of settlements with firms accused of similar violations with off-channel communications. JPMorgan was the first to get hit,
Subsequent sweeps hit
Most of the firms named in the SEC's latest settlement either declined to comment or did not respond to requests for a statement. One of the companies, the New York-based investment bank PJT Partners, reported its violations on its own to regulators and incurred a relatively small $600,000 fine.
A spokesperson for Blackstone said, "We are pleased to have resolved this matter. We have already taken significant steps to further strengthen our electronic communications procedures — including before the start of this inquiry — and are committed to the highest standard of compliance."
A spokesperson for Schwab said, "We are pleased to resolve this immaterial matter and remain focused on delivering exceptional service and an outstanding experience to our clients."
The firms and subsidiaries named in the Jan. 13 settlement, and the amounts they had to pay, were:
- Blackstone Alternative Credit Advisors, Blackstone Management Partners and Blackstone Real Estate Advisors: $12 million
- KKR: $11 million
- Charles Schwab: $10 million
- Apollo Capital Management: $8.5 million
- Carlyle Investment Management, Carlyle Global Credit Investment Management and AlpInvest Partners: $8.5 million
- TPG Capital Advisors: $8.5 million
- Santander US Capital Markets: $4 million
- PJT Partners LP: $600,000
