The U.S. Securities and Exchange Commission’s (SEC) was founded in 1934 during the Great Depression. The SEC’s mission is to “protect investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation” with the end goal of making a positive impact on the U.S. economy, capital markets and people’s lives.1
The organization oversees federal securities laws, The SEC roots out the misconduct of those who sell and trade securities, holds wrongdoers accountable and provides resources to educate investors so they can make good investment decisions and avoid fraud.
There are areas where the SEC tends to focus their enforcement actions.
Compliance in these areas helps businesses avoid SEC scrutiny.
Failure to Maintain Electronic Communications
In January 2025 the SEC charged nine investment advisers and three broker-dealers “for failures by the firms and their personnel to maintain and preserve electronic communications, in violation of recordkeeping provisions of the federal securities laws” and these firms combined agreed to pay civil penalties totaling $63.1 million. 2
Recordkeeping failures are serious violations of federal securities laws as they call into question the transparency and integrity of the markets and their participants. The issue in this enforcement action was the use of unapproved communication methods — or off-channel communications — sent and received by multiple levels of employees including supervisors and senior managers.
“Off-channel communications refer to electronic messaging platforms outside of traditional, monitored channels like company email systems…including apps and services like WhatsApp, Signal, Bloomberg messaging, and social media platforms.3 In fiscal year 2024, the SEC’s recordkeeping cases resulted in more than $600 million in civil penalties against more than 70 firms and since December 2021 the SEC’s recordkeeping cases have resulted in charges against more than 100 firms, netting more than $2 billion in penalties.4
Disclosure Issues
A key federal securities law, referred to as the “truth in securities law” requires companies offering securities to provide truthful information about securities (e.g., stocks or bonds for public sale) and the risks associated with investing in them, making disclosure requirements ‘the cornerstone of federal securities laws.’5 In 2024, the SEC found 12 investment advisers non-compliant by advertising hypothetical performance to the general public, using “untrue or unsubstantiated statements of material fact and/or testimonials, endorsements or third-party ratings that lacked disclosures and advertising misleading performance that was not fair and balanced.”6 Many of the SEC’s enforcement actions include violations of disclosure requirements.
In the SEC fiscal year ending on September 20, 2025 the Commission reported it brought 90 actions against investment advisers and their representatives.7 Other major areas of SEC scrutiny included failure to file timely reports, illegal trading and fraudulent offerings.
Royal Oak Securities Fraud & Investment Loss Attorneys
Our Royal Oak Securities Law Firm is dedicated to protecting investors from fraud, scams, and broker misconduct. We use our experience in securities law to safeguard your interests and seek recovery for your losses. Have concerns about how your investments are being handled? Call today to speak with an attorney – free consultation.
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1 U.S. Securities and Exchange Commission Mission
Link: https://www.sec.gov/about/mission
2 Twelve Firms to Pay More than $63 Million Combined to Settle SEC’s Charges for Recordkeeping Failures, 1/13/2025
Link: https://www.sec.gov/newsroom/press-releases/2025-6
3 Scrutiny of Off-Channel Communications Capture, Archive and Surveillance, Peter Kenny, 6/27/2024
Link: https://www.acaglobal.com/industry-insights/scrutiny-of-off-channel-communications-capture-archive-and-surveillance/
4, 6 SEC Announces Enforcement Results for Fiscal Year 2024, 11/22/2024
Link: https://www.sec.gov/newsroom/press-releases/2024-186
5 SEC Securities Disclosure: Background and Policy Issues
Link: https://www.congress.gov/crs-product/IF11256
7 2025 Fiscal Year in Review: SEC Enforcement against Investment Advisers to Private Funds, Registered Funds, and Retail Clients, 10/16/2025
Link: https://www.sidley.com/en/insights/newsupdates/2025/10/2025-fiscal-year-in-review-sec-enforcement-against-investment-advisers