The American Securities and Exchange Commission (SEC) penalized the company, including financial giants. Companies will pay a total fine of $63.1 million for using unapproved communication methods.
Details of Penalties
The SEC determined that these firms violated the recordkeeping provisions of the federal securities laws. Employees, managers and auditors of the relevant companies communicated via messaging through unofficial channels. The regulator also stated that the companies in question “failed to reasonably supervise” their staff because they did not establish protocols to prevent or detect the use of unauthorized messaging platforms.
Among the companies penalized were large companies providing financial services such as Charles Schwab, Santander and Blackstone. Blackstone Alternative Credit Advisors LP, Blackstone Management Partners LLC and Blackstone Real Estate Advisors LP together agreed to pay a $12 million penalty.
“When companies fail to meet these obligations, the consequences go far beyond the production of incomplete documents; such failures impact the transparency and integrity of markets and their participants,” -Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement
In addition to fines, the SEC issued warnings for financial institutions to cease recordkeeping violations and avoid further violations. Firms and companies are in the process of restructuring protocols to address gaps in their compliance policies.
The regulator stated that such violations have negative impacts on the transparency and integrity of markets. These violations of companies are not only document deficiencies, but also damage confidence in the market.
Crypto and Traditional Finance
Companies aim to prevent similar violations in the future by implementing the new compliance policies determined by the SEC. The SEC stated that they will maintain strict audit mechanisms to prevent such violations from continuing. The SEC, which has so far accused cryptocurrencies of irresponsibility and not complying with the rules, has not created crypto-specific rules. However, it seems that financial institutions that have existed in a similar structure for more than 100 years do not have great report cards. Democrats, who see the crypto space as the wild west, perhaps should also care a little about such fines imposed on giant financial companies and banks.
If similar sanctions were imposed on popular cryptocurrency exchanges, mainstream media would probably make headlines. However, if your company is large enough, this is not such a big problem for the mainstream media.
As a result, these measures of the SEC are considered an important step to ensure that financial markets comply with regulations. Investment advisors and brokerage firms plan to strengthen their internal controls to avoid similar penalties.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
