Schwab, Blackstone Among Firms Fined By SEC Over Off-Channel Comms
The controversial enforcement actions have been called a “cash cow” by Commissioner Hester Peirce.

Sign up for market insights, wealth management practice essentials and industry updates.
Hold the phone.
The enforcement of off-channel communications has become a hot-button topic for the Securities and Exchange Commission — with at least one commissioner at the agency calling it an overreach. This week, the SEC tagged a dozen more advisory firms with a combined $63 million in fines over client conversations that took place on personal devices or apps. Employees, including supervisors and senior managers from Charles Schwab, Blackstone, Apollo Capital and nine other firms, allegedly sent and received messages from clients that weren’t being recorded by their compliance departments.
It’s the latest development in a years-long campaign to crackdown on advisors that use personal messaging platforms, like Whatsapp or personal emails. “The SEC is certainly acting in the best interest of the investing public here,” said Bill Singer, a securities lawyer with more than four decades of experience. “It often is used to defraud public investors and short-circuit the employer’s necessary compliance oversight.”
Used to Call Me On My Cell Phone
Off-channel communication rules help ensure regulators keep track of what advisors are telling clients, and that they’re playing by the rules. More than two dozen advisors agreed to settle SEC allegations in August, including Ameriprise, Edward Jones, LPL, and RayJay, which paid $50 million each. That’s after the agency had dished out some $3 billion in fines to industry firms over the past two years:
- Eleven advisory firms were fined in September, including Stifel and Invesco.
- Citi, Goldman Sachs, Bank of America, and more than a dozen others, were collectively fined more than $1 billion in 2022 for using WhatsApp and personal emails.
Leave a Message. The controversial enforcement actions are now being lampooned by officials at the SEC itself, like Commissioner Hester Peirce who called the actions a “cash cow” during a Congressional hearing in September. The problem is that at least some of the cases took place during the pandemic when advisory firms were shut down. That forced advisors to take their work home with them, meaning personal cell phones or home lines became the new norm. Pierce has said the typical enforcement action was not based on fraud.
“We also have to be careful that we are not engaging in a Luddite form of regulation,” Singer told The Daily Upside, adding that many Millennials and Gen-Xers see telephone and email communications as antiquated. Critics have also questioned whether off-channel communications warrant this much attention. The settlements are certainly well within the SEC’s purview, but did they truly merit billions of dollars in fines?
“For many firms, that all amounts to little more than a nuisance and the cost of doing business,” Singer said.