Orion Compliance: Recent SEC Record-Keeping Fines

Requirements to Preserve Electronic Communication

In a world of ever-changing and advancing technology, the SEC has made it clear that it will act against companies utilizing external communication platforms that fail to preserve electronic records of relevant communications in violation of Section 17(a)(1) of the Securities Exchange Act of 1934 and Rule 17g-2(b)(7) thereunder.

Two years ago, the SEC handed out $1.8 billion dollars in fines to 11 of the world’s largest banks and brokerages for using messaging apps that fail to preserve records of communication.  These 11 banks admitted that they violated SEC rules by failing to store written communications.²

In furtherance of what is being called US regulators’ WhatsApp investigations, on September 3, 2024, the SEC hit 6 credit rating agencies a combined $49 million in fines.  The largest fines were given to Moody's Investors Service and S&P Global Ratings, both of which agreed to pay $20 million in fines, while Fitch Ratings agreed to an $8 million penalty.

“In addition to significant financial penalties, each credit rating agency was ordered to cease and desist from future violations of these provisions and was censured.” Four firms were “ordered to retain compliance consultants [and] have agreed to, among other things, conduct comprehensive reviews of their policies and procedures relating to the retention of electronic communications….and their respective frameworks for addressing non-compliance by their personnel with those policies and procedures.”³

What’s the best path forward for these companies and others similarly situated?
 

Orion Compliance: The Best Path Forward

The lack of proper compliance policies and procedures has been identified as the trigger for investigations and fines.  The SEC argues, “We have seen repeatedly that failures to maintain and preserve required records can hinder the staff’s ability to help ensure that firms are complying with their obligations and the Commission’s ability to hold accountable those that fall short of those obligations, often at the expense of investors,” said Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement.⁴

Orion Compliance, available as an integrated or standalone solution, provides a path forward for both companies revamping their compliance programs as a result of SEC reprimand, and companies striving to avoid SEC scrutiny by maintaining proper compliance.

Orion Compliance, when implemented properly, provides a comprehensive one-stop solution to preserving all relevant written and electronic communications. With a single dashboard accessible from anywhere, Orion Compliance provides comprehensive document archival so your company is compliant and always exam-ready.

Orion Compliance provides managers and professionals the tools required to help ensure proper and up-to-date record preservation in-line and compliant with federal requirements.  

Join the many others that rely on Orion Compliance as their comprehensive and automated compliance solution.