Happy New Year! I hope you had an enjoyable holiday season. At least happier than that of JP Morgan Securities, which, right before Christmas, got to write checks to the SEC and the CFTC totaling $200 million. That’s a lot, even for JPMS. How did this happen?
Well, the story starts with a very old, and very broad, SEC rule, specifically, SEC Rule 17a-4(b)(4), which, since 1939 (as best I can determine) has required that broker-dealers preserve in an easily accessible place originals of all communications sent and received relating to the firm’s “business as such.” It was probably never easy to divine with much precision exactly what “business as such” means, but, clearly, this somewhat odd phrase was deliberately employed to capture an extremely wide swath of documents. So, for convenience sake, let’s say that it covers pretty much everything that anyone at a BD – but particularly the management of a BD – sends or receives that’s got anything whatsoever to do with the firm’s business.
To read the rest of the post on Ulmer’s Broker-Dealer Law Corner blog, click here.