SEC Charges Broker-Dealer with Failing to Preserve Required Electronic Records
Sept. 23, 2020
File No. 3-20050
September 23, 2020 - The Securities and Exchange Commission today announced settled charges against a broker-dealer for failing to preserve business-related text messages exchanged on the personal devices of several of its registered representatives.
The SEC's order finds that JonesTrading Institutional Services, LLC, a registered broker-dealer based in California, failed to preserve business-related text messages sent or received by several of its registered representatives on their personal devices when communicating with each other, with firm customers, and with other third parties. As alleged in the order, the text messages concerned, among other things, the size of orders, the timing of trades, and the pricing of certain securities. As further alleged, some of the messages were responsive to a request for records made to the firm by SEC staff in an unrelated investigation, but, because the responsive text messages were not retained on JonesTrading's firm-sponsored systems, JonesTrading failed to produce the relevant text messages to the staff. The order further finds that JonesTrading's senior management were among those sending and receiving business-related text messages that were not retained by the firm.
The SEC's order finds that JonesTrading violated the recordkeeping provisions of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-4 thereunder. JonesTrading, without admitting or denying the findings in the SEC's order, agreed to cease and desist from committing or causing any violations of those provisions, to be censured, and to pay a civil penalty of $100,000.
The SEC's investigation was conducted by Tejal D. Shah, John O. Enright and Thomas P. Smith, Jr. of the New York Regional Office, and was supervised by Lara S. Mehraban.